ERISA gurus Fred Reish, Bruce Ashton and Brad Campbell of Drinker Biddle are asking the Department of Labor's Employee Benefits Security Administration (EBSA) to create a "corrections program" for service providers complying with DOL's fee disclosure rules under 408(b)(2).
Why do service providers need a correction program? Reish, along with Ashton and Campbell, former head of EBSA, told current EBSA head Phyllis Borzi in a letter Tuesday that even "well-intentioned service providers can easily make compliance mistakes, and some service providers likely have failed to make the required disclosures on time."
The new 408(b)(2) service provider disclosure rules affect about 750,000 retirement plans covering more than 125 million Americans, the Drinker Biddle team says, and "violations, even if technical failures of little practical significance, result in a prohibited transaction, an outcome that can subject the service provider to returning some or all of its fees, paying an excise tax, and possibly other penalties." While the rule has a narrow error correction provision for service providers, the three lawyers say that their "experience is that it likely will not cover many common errors, even ones that could be minor technicalities."
