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ERISA Penalty Box

Q and A Perspective on 408(b)(2) from cutting edge recordkeeper Ascensus

  1. On a scale of 1-10(most knowledgeable) how aware and concerned are your clients about 408(b)(2) and 404(a)


Plan sponsors have become increasingly more knowledgeable and concerned about both regulations as the deadlines approach. Increased coverage through the media and discussions with their advisors have increased the number of questions regarding both events.


  1. How are you helping them prepare


We have been providing periodic updates on the status and requirements of the regulations. In addition, we have provided information regarding our fulfillment of our obligations as a service provider and how we will support their participant disclosure needs via newsletters and webcasts. The participant disclosure has been pre-filled and designed to capture the key elements required by the regulations, but allows the flexibility for the advisor to work with their client to customize the disclosure prior to sending to their employees.


3. How have you had to adapt your practice to adjust to the new requirements?


Our current sponsor and participant materials largely addressed the requirements outlined in the regulations.  Modifications were made to address some of the newer elements specifically resulting from 408(b)(2) and 404(a).  In addition, some procedural changes have been made to ensure the proper timing of delivery of the required disclosures.


4.  What advisor issues and concerns do you see?


For the advisor personally, ensuring they address the same requirements outlined in 408(b)(2) as it relates to the services they provides to their clients.  It will also be critical for the advisor to help clients understand and properly compare services and their related costs across different service providers.  For 404(a), ensuring they adopt new procedures along with their clients to ensure participant disclosures are reviewed and distributed timely.  They will also need to review current procedures to ensure they meet the advance notification requirements imposed by 404(a).


5. What opportunities do you see?


For advisors focused on this market, their ability to demonstrate the value they can deliver in their client relationships will be key.  It has become increasingly more difficult for the casual advisor to effectively compete in this space, opening the door for the experienced advisor to add value not only in the area of compliance, but moving towards a model that focuses more on client outcomes.


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