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DOL Participant Disclosure Regulations

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Stephen I. Jurmu
Foster Swift Employment, Labor & Benefits Quarterly
Winter 2010

On October 20, 2010, the U.S. Department of Labor published a final regulation implementing new disclosure requirements for participant-directed individual account plans (e.g. 401(k) plans). Participant-directed individual account plans allow participants and beneficiaries to direct the investment of the assets held in their individual plan accounts. The new regulation arose out of the Department’s growing concern that participants and beneficiaries did not have access to or might not be considering critical information when directing their investments in such plans.

Under the new regulation, plan administrators of participant-directed individual account plans must disseminate certain plan-related and investment-related information to participants and beneficiaries. The regulation also describes the comparative format in which the plan administrator must furnish the investment-related information and provides a model comparative chart as an appendix. The disclosure requirements will apply to plan years beginning on and after November 1, 2011. Compliance will be required for calendar year plans on January 1, 2012.

The Department of Labor issued these final regulations under Section 404(a) of the Employee Retirement Income Security Act of 1974 (ERISA), that require plan fiduciaries to act prudently and solely in the interest of plan participants and beneficiaries. The regulation also contains conforming amendments to the regulations issued under ERISA Section 404(c). Accordingly, the disclosure requirements will apply to participant-directed individual account plans regardless of whether the plans elect to comply with ERISA Section 404(c).

The final regulation will affect plan sponsors, fiduciaries, participants, and beneficiaries of participant-directed individual account plans, as well as service providers.