DOL’s Field Assistance Bulletin 2012-2 – The Growing Application of Fee Disclosure Regulations to Brokerage Account Windows

On Monday, the Department of Labor (DOL) issued Field Assistance Bulletin (FAB) 2012-02, a 23-page Q&A intended to interpret and explain the fee disclosure regulations which will require numerous disclosures to plan participants (who are able to direct their own investments) not later than August 30, 2012 (see 29 CFR  §2550.404a-5).  The regulations generally require annual and quarterly disclosure of certain plan related information (paragraph (c) of the regulations) and certain investment related information with respect to all designated investment alternatives in the plan (paragraph (d) of the regulations).

There have been a lot of questions within the retirement plan community regarding the application of the regulations to participant directed brokerage account windows. I have heard a few people opine that paragraph (d) does not apply to brokerage account windows. This may be wishful thinking—paragraph (d) requires numerous (and some would say onerous) disclosures to participants. FAB 2012-2 Q&A-30 states that a self-directed brokerage account does not get a pass on the requirements under paragraph (d) for any investments within the account that are designated investment alternatives.  The relevant question is then, how does one define a designated investment alternative?  According to the DOL, it is any investment “specifically identified as available under the plan.”  While many practitioners, prior to FAB 2012-2, would not have worried about the application of paragraph (d) to brokerage account windows,  I think that post-FAB 2012-2, they may be looking closely at the communications made to participants about a plan’s investments.  You can read all 23 pages of the FAB by clicking here.

This entry was posted in Informational. Bookmark the permalink.

Comments are closed.