Client Alert

Attention ERISA Plan Sponsors: Get Ready Now for New Form 5500 Requirement to Disclose Compensation Paid to Plan Service Providers

October 14, 2009

Eric Keller and Andrea Gehman

For 2009 and later plan years sponsors of most ERISA retirement and welfare plans must comply with new reporting requirements issued by the Department of Labor (the DOL) for Schedule C to Form 5500, the schedule that reports fees paid by plans for services. The DOL indicated that in its view plan fiduciaries have a fiduciary obligation to engage in an annual review of plan fees and expenses as part of the fiduciarys ongoing obligation to monitor arrangements with plan service providers. The revisions to Schedule C are intended to aid fiduciaries in satisfying this obligation.

The requirements are extensive and complicated and plan sponsors will need to collect from plan service providers the information required to be disclosed. Plan sponsors should start implementing measures now to ensure that they will receive (or have received) the appropriate information to file in 2010 for the plan year 2009.

The new Schedule C disclosure requirements:

  • broaden the definition of service provider whose compensation must be reported;

  • provide for reporting of direct compensation paid to service providers; and

  • for the first time, require reporting of indirect compensation received by service providers.

To help our clients understand and comply with these new requirements, we set forth Action Items below that highlight the steps plan sponsors should consider taking, followed by a brief overview of the requirements.

Click here for a PDF of the full text

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