All plan providers are hurrying to meet the April 1 deadline of providing fee disclosures to plan sponsors (cheap plug, I am still available to draft client service agreements to comply with 408(b)(2) for $1,000). The deadline doesn’t look like it’s going to be extended, despite many retirement plan business groups asking for an extension. The April 1 deadline may be scary for some, but there is one other deadline that scares me a lot more and no one is talking about it. It is 60 days later and the people have to provide it, don’t even know about it.
While the onus is on plan providers to make the disclosures to the plan sponsor on April 1, the onus shifts to plan sponsors for the plan participant Section 404(a)(5) disclosures by May 31. While plan providers will help plan sponsors out with the information to complete these, I’m sure that there will be some that won’t. It’s just human nature to understand that if there is a mandatory compliance, a few providers will either ignore it or claim that it doesn’t apply to them.
While plan sponsors are on the hook if they don’t get the 408(b)(2) plan disclosures, there is a way out from liability if they don’t. They don’t have the same luxury with the 404(a)(5) disclosures, it’s fully on them to get it done and make sure their plan providers are ready to help.
So while 408(b)(2) is all the rage these days, the Section 404(a)(5) regulation scares me more because while I have faith in the retirement plan industry, too many plan sponsors are like deer in the headlights and don’t have the right providers telling them of their duty by May 31.