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September 2010
DOL Issues New Disclosure Rules
By Gary E. Shuford II

     After years of debate and uncertainty, the Department of Labor (DOL) has finally issued their “interim final rules” on retirement plan disclosures which are set to go into place next year.

     Two of these rules are of particular interest to plan sponsors—one relating to fees and another relating to fiduciary status.


Fee Disclosure

     Do you know what you are being charged in plan fees? You will next July, when the new 408(b)(2) rules take effect. At that time, all advisers and registered representatives working for the plan are required to fully disclose all fees received, as well as a list of services provided to the plan sponsor for those fees. The regulations require all service providers to disclose their fees to the plan sponsor as well.

     Plan sponsors and those that advise them will tell you that these disclosure rules are long overdue. But interestingly, many in the financial services industry were reticent to support this regulation, due to potential fee compression and other concerns.

     What do the new fee disclosure rules mean for you? They mean that plan sponsors will have the ammunition they need to choose the right advisor. It also means that advisors will be held accountable for what they charge plans. So if phrases like 12b-1 and Sub TA are confusing to you, there is clear direction in this bill to change that. By making fees more transparent, the aim is for plan fees to decrease while performance increases.


Fiduciary Status

     The 408(b)(2) rules also require parties working on and with a plan to disclose their fiduciary status. A Fiduciary is defined as “a legal or ethical relationship of confidence or trust regarding the management of money or property between two or more parties, most commonly a fiduciary and a principal.”

     The disclosure of fiduciary status has been an area of tremendous debate over the past few years. With the new regulations, advisors working on plans will not be able to shift the blame for excessive fees or poor investment selection / monitoring back on the plan sponsor and committee. Instead, the advisor will be held to the same fiduciary status as the committee.


     This legislation has been a work in progress for many years, clearly with the best interest of the public at heart. Charging a fee for a service is acceptable, but an unwillingness to disclose it transparently is not.

     Content contributed by the Charlotte office of Elliott Davis, PLLC, an accounting, tax and consulting services firm providing clients the solutions needed to achieve their objectives in 10 offices throughout the Southeast. For more information, contact Dan Warren at 704-808-5210 or visit

AIF, CRSP, Retirement Plan Advisor, Elliott Davis Investment Advisors
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