DOL Creates On-Line Tool to Help ERISA Plans Report Violations of 408(b)(2)

August 03, 2012

The U.S. Department of Labor (“DOL”) recently announced a new proposal to provide a web-based tool for ERISA covered retirement plans to report violations of the new 408(b)(2) disclosure requirements.  Under the new 408(b)(2) regulations, as of July 1, 2012 ERISA covered service providers were required to provide retirement plans, to which they provide services, with certain disclosures.  Failure to provide the required disclosures will result in services to the ERISA covered plan being classified as a prohibited transaction under ERISA and the Internal Revenue Code.  The purpose of the new tool is to assist plan sponsors in determining whether they have all the required information and to provide an easy way for plan sponsors to report service providers who fail to make the required 408(b)(2) disclosures.

If your investment adviser provides services to retirement plans and you did not provide the plan with the required 408(b)(2) disclosures, one of our consultants can prepare for you a disclosure form that meets the requirements of the new 408(b)(2) regulations.  As discussed above, a failure to provide the required 408(b)(2) disclosures to clients that are ERISA covered retirement plans will result in your services to such clients being considered a prohibited transaction under ERISA.  If reported to the DOL, your investment adviser could be required to return any advisory fees received for services that are deemed to be prohibited transactions plus an additional twenty percent penalty!  While the July 1 deadline to provide the 408(b)(2) disclosures has passed, if you have not yet made the required disclosures to any of your firm’s ERISA covered plan clients, it is critical that you do so promptly in order to avoid being reported to the DOL for failure to make the required disclosures and to potentially prevent the revocation of compensation received for services provided to an ERISA covered plan. It is important not to delay any further in making the 408(b)(2) disclosures to ERISA covered plan clients!

If you would like to speak with us regarding the services we can provide to assist you with preparing your 408(b)(2) disclosure information, please contact your consultant if you are an existing client of RIA Compliance Consultants.  If you have not previously worked with RIA Compliance Consultants, please contact us to schedule a time to speak with one of our consultants.

Posted by Bryan Hill
Labels: 408(b)(2), DOL, ERISA