408(b)(2) RULES WILL INCREASE DISCLOSURE REQUIREMENTS FOR 401(k) SERVICE PROVIDERS

On July 16, 2011, the Department of Labor's 408(b)(2) rules will go into effect. These new rules will require registered representatives, investment advisers and others working with 401(k) plan sponsors to provide a detailed overview of current services and the compensation received for those services. The rule focuses on service providers and compensation arrangements that are most likely to raise questions for plan fiduciaries with respect to the amount of compensation being received by a service provider for plan-related services and potential conflicts of interests that might compromise the quality of those services.  Such requirements will have a profound effect on service providers and should lead to significant changes in current disclosure practices.