Fast facts about Section 408(b)(2)

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Section 408(b)(2), a 2012 regulation for retirement plan fiduciaries enacted by the Department of Labor, was effective Jan. 1, 2012. Here are some fast facts about 408(b)(2):

  • It affects all retirement plan fiduciaries, including plan sponsors and investment committee members.
  • It requires plan sponsors to understand all fees and expenses associated with their retirement plan.
  • It requires plan sponsors to have a contract or agreement, in writing, with their service providers disclosing all fees associated with your retirement plan, and it must be reasonable.
  • It requires plan sponsors to make sure services being performed are necessary to establish and operate a qualified plan.
  • It requires plan sponsors to make sure no more than reasonable compensation is paid for services performed, and their fees are competitive within the marketplace.
  • It requires service providers to provide full fee transparency not only to plan sponsors, but also to each plan participant.

Information provided by Oswald Financial.

 

DOL enacts Section 408(b)(2) for retirement plan fiduciaries

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Section 408(b)(2), a 2011 regulation from the Department of Labor, requireed retirement plan fiduciaries, including plan sponsors and investment committees, to understand all fees and expenses associated with their retirement plan. Plan sponsors must also be able to determine if their fees are competitive, or “reasonable” in relation to the services they receive. 

The new regulation required:

  • The contract or arrangement must be in writing and reasonable.
  • The services being performed are necessary to establish or operate a qualified plan.
  • No more than reasonable compensation is paid for the services performed.

The DOL required compliance with the regulation on or before Jan. 1, 2012.

Source: Oswald Financial