Does the Department of Labor’s fee transparency regulation cover tax-sheltered annuity programs that are ERISA-covered 403(b) plans?
DOL Field Assistance Bulletin No. 2012-02 says yes. Under Section 401 of ERISA, the regulation covers 403(b) plans established or maintained by tax-exempt organizations.
However, it also says that, consistent with DOL Field Assistance Bulletins 2010-01 and 2009-02 as well as 29 CFR §2550.408b-2(c)(1)(ii), the DOL will not take enforcement action against any plan administrator who reasonably determines it would be impracticable, or impossible, to obtain the information necessary to meet the disclosure requirements under paragraph (d) of the regulation regarding any designated investment alternative that is an annuity contract or custodial account described in Internal Revenue Code Section 403(b) if:
However, it also says that, consistent with DOL Field Assistance Bulletins 2010-01 and 2009-02 as well as 29 CFR §2550.408b-2(c)(1)(ii), the DOL will not take enforcement action against any plan administrator who reasonably determines it would be impracticable, or impossible, to obtain the information necessary to meet the disclosure requirements under paragraph (d) of the regulation regarding any designated investment alternative that is an annuity contract or custodial account described in Internal Revenue Code Section 403(b) if:
- the contract or account was issued to a current or former employee before Jan. 1, 2009;
- the employer ceased to have any obligation to make contributions (including employee salary reduction contributions), and in fact ceased making contributions to the contract or account for periods before Jan. 1, 2009;
- all of the rights and benefits under the contract or account are legally enforceable against the insurer or custodian by the individual owner of the contract or account without any involvement by the employer; and
- the individual owner is fully vested in the contract or account.
In general, a plan's election of the transitional relief provided in the Field Assistance Bulletins as well as the applicability of the exemption in §2550.408(c)(1)(ii) are evidence of the impracticability of obtaining the information required under paragraph (d) of the regulation. The regulation does not apply to tax-sheltered annuities that are not ERISA-covered plans.
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