Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

Resources - Tax Center - Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

ERISA Plan Disclosures - Driving Plan Value


Are you the plan administrator for your company’s retirement plan(s)? Do you have fiduciary responsibility over a retirement plan? If so, then Boris Benic & Associates wants you to know about the new ERISA 408(b)(2) regulations that require plan service providers to take an active role in assessing the services received and fees paid for plan related services. Effective July 1, 2012, plan service providers are now required to send disclosure information to all clients. This means that plan sponsors now have the additional responsibility of reviewing the reasonableness of the services and fees received from providers. In addition, any conflict of interests in existing provider relationships must be addressed. These changes add a number of new responsibilities for plan sponsors in executing their fiduciary duties.


Key Point: Plan service providers now have increased fiduciary responsibilities as a result of ERISA 408(b) (2) regulations! Assessment of the reasonableness services provided and fees charged are just one of the new requirements. Contact us today to learn more about the regulation and how it will impact your company.


Covered Plans

The Department of Labor issued a list of covered plans which must meet the disclosure and assessment requirement. These include 401(k) plans, profit sharing plans, money purchase plans, 403(b) plans and specific types of pension plans. SEP IRA’s, SIMPLE IRA’s, traditional and Roth IRA’s are exempt. Additionally, government plans, select church plans, or those covering a self-employed individual or spouse are also exempt.


Covered Service Providers

To help plan sponsors identify which providers should be providing a disclosure the DOL has a provided a list of Covered Service Providers (CSPs) who are required to issue a disclosure. These include companies that expect to receive $1000 or more in compensation including:

  • Investment advisers registered under Federal or State law

  • Record-keepers or brokers who make designated investment alternatives available to the covered plan

  • Providers of the following services who receive indirect compensation in connection with accounting, auditing, actuarial, banking, insurance, securities brokerage, third party administration or valuation services.

Disclosure Details

There are specific details about what information needs to be included in the disclosure and how it should   be presented to you. Key items plan sponsors should expect when receiving their disclosures include:

  •  All information required to be disclosed by the CSP must be done in writing.

  • CSPs are required to describe the services provided/to be provided and list all direct and indirect compensation to be received. Direct compensation means compensation received directly from the covered plan. Indirect compensation refers to compensation received from any source other than the plan sponsor (i.e. affiliate or subcontractor).

  • CSPs must disclose whether they are providing recordkeeping services and the compensation attributable to such services, even when no explicit charge for recordkeeping is identified as part of the service "package" or contract.

  • Some CSPs must disclose an investment's annual operating expenses (e.g., expense ratio) and any ongoing operating expenses in addition to annual operating expenses.

  • The final rule contains a "pass-through" for investment-related disclosures furnished by recordkeepers or brokers. A CSP may provide current disclosure materials of an unaffiliated issuer of a designated investment alternative, or information replicated from such materials, provided that the issuer is a registered investment company (i.e., mutual fund), an insurance company qualified to do business in a State, an issuer of a publicly-traded security, or a financial institution supervised by a State or Federal agency.

  • Service providers may use electronic means to disclose information under the 408(b)(2) regulation to plan fiduciaries provided that the covered service provider's disclosures on a website or other electronic medium are readily accessible to the responsible plan fiduciary.

ERISA 408(b)(2) provides a higher level of financial transparency for plan administrators and participants. As a result, it is important to not only understand the intricacies of the new regulations, but conduct a thorough and thoughtful analysis of the information provided. If your plan is not receiving the proper level of service for fees rendered then it might be necessary to find a provider that offers greater value to your retirement plan. As outlined above, it’s essential to review the plan audit, recordkeeping, investment and TPA relationships on a yearly basis.


Contact Us

Unsure how the new regulations impact your situation? If so, contact us today! Our firm has significant experience working with plan sponsors maintain ERISA compliance. We also have experience conducting benefit plan audits as well. In fact, we work with companies across Long Island and New York City conducting plan audits. For additional information on how we can assist you, please contact Boris Benic, CPA, at 516- 248-7361, or click here to email Boris. In a brief conversation he can assess your situation and provide you with the necessary information.




Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York


Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York