Interim Final Regulations Expand Fee Disclosure Requirements For Exemption For Provision of Services to ERISA Plans

On July 16, 2010, the Department of Labor issued final interim regulations that define “reasonable contract or arrangement” for purposes of the statutory exemption contained in Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). This exemption permits a party in interest to receive compensation for rendering services to a plan subject to the fiduciary responsibility provisions of ERISA provided that, among other things, the compensation to be received is “reasonable.” The focus of the new requirements is to ensure that there is adequate disclosure of compensation in order to permit a fiduciary to determine whether the compensation is reasonable. As such, effective July 16, 2011, service providers who provide specified services to covered plans or covered plan asset entities will be required to provide detailed disclosure to responsible fiduciaries with respect to the services provided and direct and indirect compensation received by such covered service provider, its affiliates and subcontractors. 

The  memorandum summarizes the final rules and provides a roadmap for navigating the new regulations.