DOL Issues Interim Final Rule on ERISA Plan Service Provider Fee Disclosures
By Lawrence J. Hass, Joshua H. Sternoff & Matthew E. Nadworny
On July 16, 2010, the Department of Labor (DOL) published an interim final rule (the Final Rule) clarifying the disclosures required by service providers to ERISA-covered employee benefit plans. Because of the breadth of ERISAs prohibited transaction rules, payments by an ERISA plan to a service provider are prohibited unless the exemption provided by Section 408(b)(2) of ERISA is available. Section 408(b)(2) provides that the exemption is available only where, in connection with a particular contract or arrangement between an ERISA plan and a service provider: (i) such contract or arrangement is reasonable, (ii) the services are necessary for the establishment or operation of the plan, and (iii) no more than reasonable compensation is paid for the services.