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The Dueling Fiduciary Shadows of 12b-1 Fees

Posted in 408b2

Fund distributors are contractually entitled to the 12b-1 payment, not the plan, and for very specific distribution purposes. The mutual fund’s Board has already had to make a fiduciary determination that the fee is reasonable, in the best interest of the mutual fund shareholders, and that its payment complies with Rule 12b-1. Separately, the ERISA plan’s fiduciary can only permit the purchase a mutual fund which has a 12b-1 program if the amount of the 12b-1 fee is reasonable from the plan’s point of view, regardless of whether the mutual fund feels its reasonable.… Continue Reading

A Twist to the “Amount Involved” In a 408(b)(2) Prohibited Transaction

Posted in 408b2, Complex Prohibited Transactions

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… Continue Reading

Behind 408(b)2’s Looking Glass: Parties-In-Interest, Non-CSPs and Other Complex Tales

Posted in 408b2, Complex Prohibited Transactions, Fiduciary Issues

Now that the initial 408(b)(2) disclosures are out, the challenge becomes understanding them. Beyond just understanding whether or not the fees disclosed are reasonable (a challenge in itself), the disclosures do something arguably more important: they take us behind the looking glass, opening a window to a world with which most are not familiar, but… Continue Reading

Institutionalizing 408b-2 Compliance in Financial Service Firms: New Responsibilities for the Securities Compliance Professional

Posted in 408b2

With all of the intense activity in the marketplace related to providing the initial 408b-2 and 404a-5 disclosures in a timely manner, there is what I could only describe as a "sea change" occurring, relatively quietly, behind the scenes in financial service firms related to the ongoing responsibilities under the DOL’s new disclosure rules.  For… Continue Reading

Important 408(b)(2) Relief for 403(b) Plans

Posted in 403(b), 408b2, Complex Prohibited Transactions, Fiduciary Issues

The DOL continues with its sensitivity to the challenges created for 403(b) plan sponsors in the transition to an employer accountable world. In today’s release of the final 408(b)(2) regs, the DOL provided tremendously needed relief for 403(b)plans. The language from the preamble speaks for itself: The Department was persuaded by commenters on the interim final rule… Continue Reading

Minutiae’s Triumph: The Striking Impact of Transparency, the Prohibited Transaction Rules and the Exclusive Benefit Rule

Posted in 408b2, Complex Prohibited Transactions, Fiduciary Issues

Freedom and liberty are not merely themes sounded by politicians in political campaigns, or in rousing marches by military bands (though I am personally  particularly fond of them!), nor are they ideas which you will typically see being discussed in a piece about retirement issues. But they are themes woven into the fabric of our… Continue Reading

403(b), 8955-SSA and 408(b)2

Posted in 403(b), 408b2

Important Update. On June 21, IRS announced the extension of the 8955-SSA deadline to January 17, 2011, for which no Form 58 extension will need to be filed. The announcement is here   The challenges continue for 403(b) plans, as the IRS and DOL continue to implement their plan level rules in the 403(b) space.… Continue Reading

The Flushing Effect of the 403(b) Connection Between 408(b)(2), Participant Disclosures and Plan Audits

Posted in 408b2, Complex Prohibited Transactions, Fiduciary Issues

I would think that it is a basic law of physics that, whenever you attempt to apply a number of different and complicated principles to a single object, that the consequences on that object will be hard to predict, or even readily ascertained. So it is with a potential impact 408(b)(2) may have on many… Continue Reading

Guidelines For Keeping It Simple Under 408(b)(2)

Posted in 408b2, B/D-IA Issues

Working through the technical terms of 408(b)(2) is not much different than putting together a picture puzzle. There are a lot of pieces which fit together in some very precise ways. But, in the end, the disclosures which are required are pretty straightforward and-even given the work needed to describe certain ”wrapped” services and estimating their… Continue Reading

Annuity Investment Accounts and 408(b)2

Posted in 408b2, B/D-IA Issues, Complex Prohibited Transactions

The DOL’s newly delayed 408(b)(2) regs are particularly striking in that they demonstrate a growing sophistication, and efficiency, on the part of the EBSA staff in its approach to retirement plan financial products and services. The regs are short, by almost any measure of federal regulations, yet they are packed with meaningful rules which will… Continue Reading