On March 18, 2015, the Department of Labor (DOL) issued a direct final rule that revises the annual disclosure requirement in the participant-level fee disclosure regulations under ERISA Section 404(a). The guidance provides plan administrators with an additional two months to provide the annual disclosure. The current fee disclosure regulations require plan administrators to disclose plan and investment-related information to participants at the following times:

• On or before the date on which a participant can first direct his investments; and
• At least annually thereafter.

Under the current regulation, “at least annually thereafter” means at least once in any 12-month period. In Field Assistance Bulletin 2013-02, issued in 2013, the DOL clarified that the regulation requires annual disclosures to be made no more than one year (365 days) after the prior annual disclosure was made. The direct final rule amends this regulation by defining “at least annually thereafter” as at least once in a 14-month period. The DOL added this two month extended period to give plan administrators some flexibility in complying with the various disclosure requirements applicable to retirement plans (such as combining this annual disclosure with other participant notices). This new rule is effective June 17, 2015, but plan administrators may rely on the new 14-month requirement before that effective date if they reasonably determine that doing so will benefit plan participants and beneficiaries. This temporary enforcement policy is intended to help plan administrators whose disclosures may be due before the effective date of the direct final rule.

What Does This Mean to You?

The direct final rule provides a small but important change in the participant-level fee disclosure regulations. Plan administrators of participant-directed defined contribution plans may want to consider whether they should adjust the timing of their plan’s next required annual fee disclosure in light of this guidance.