The disclosures related to 408()(2) are really just a precursor to the next step: the imposition of the prohibited transaction taxes and penalties related to compensation which fails to meet those standards. It looks like the regs have the effect of shifting the application of the rules related to the "amount involved" in the transaction a bit. The "amount involved" in the transaction is the amount upon which the prohibited transaction taxes and penalties will be assessed.
Well prior to the new 408(b)(2) regulation, the DOL had developed guidance on the application of the prohibited transaction penalties. Compensation would be subject to penalty to the extentt that it was not reasonable. This meant that the penalties and taxes (the two are coordinated by the IRS and the DOL) only applied to the amounts above what would be a reasonable amount. (By the way, if you are looking for the manner in which to compute the correction and penalty amounts, you will need to reference the Tax Code-including the tax rules governing foundations under 53.4941(e)).
What the new disclosure rules have done is establish the principal that ANY compensation for which proper disclosure has not been made will not be considered reasonable. This means the "amount involved in the transaction" will be the entire amount of the improperly (or non) disclosed compensation. The "to the extent" rule will then only apply to that compensation which has been properly disclosed but is unreasonable.
The application of the PT rules like these tend toward the arcane, but will now become a central part of the service provider's life.
Any discussion on any tax issue addressed in this blog (including any attachments or links) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any transaction or tax-related position addressed therein. Further, nothing contained herein is intended to provide legal advice, nor to create an attorney client relationship with any party.