Pub. 1 2011 Issue 3

12 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com • According to rules under ERISA section 404(a), plan sponsors of participant-directed plans must provide participant-level fee disclosures beginning April 30, 2012, with plan years on or after November 1, 2011. This article contains a brief overview of the rules and a few suggestions to assist you in preparing to comply with these re- quirements. Service Providers Must Provide Fee Disclosures to Plan Sponsors. Because the DOL believes that fee disclosures are necessary to assist plan fiduciaries of defined contribution and defined ben- efit plans in performing their duties, they have issued the 408(b) (2) regulations. The primary goal is to provide plan sponsors/ fiduciaries with the information they need to determine whether the fees associated with the retirement plan(s) are “reasonable.” How do you know if fees are reasonable? By benchmarking them to determine where you stand relative to your specific circum- stances and the market as a whole. Service providers that fail to comply by the deadline may be subject to severe penalties. We suggest reviewing the regulation, requesting the required data from the plan providers, and bench- marking the information now in order to meet the requirements within the allotted time frame. Plan Sponsors Must Provide Participant-level Fee Disclosures Beginning with Plan Years on or After November 1, 2011. The goal behind this requirement is to ensure fiduciaries of participant-directed plans are providing appropriate information regarding fees that impact participant accounts so that partici- pants and beneficiaries can make more informed decisions. The information that must be provided is extensive and falls into two categories: plan-related information, and investment-related information. Plan-related information has three subcategories: • General plan information. This includes items such as how participants make investment elections, the investment options available, when participants can make changes, and descriptions of investments such as self-directed brokerage accounts. • Administrative expenses. Recordkeeping, legal, or accounting expenses passed through to participants must be disclosed. • Individual expenses. These include additional expenses that could be passed through to participants, such as loan fees. Investment-related information includes a number of items that must be provided to participants as follows: Q retirement plan — continued Accounting | Assurance | Tax | Consulting | Financial advisory * * Offered through LarsonAllen Financial, LLC, member FINRA & SIPC. Noticeably Different. s -ORE THAN YEARS OF SUCCESS SERVING THE DEALERSHIP INDUSTRY s ,OCAL EXPERTS WITH NATIONAL RESOURCES s )NSIGHT RATHER THAN HINDSIGHT We’ll keep you running strong even in uncertain times. ©2009 LarsonAllen LLP