Reasonable Contracts or Arrangements Under Fee Disclosure; Hearing
Federal Register: February 27, 2008 (Volume 73, Number 39)
Proposed Rules
Page 10405-10406
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr27fe08-14
DEPARTMENT OF LABOR
Employee Benefits Security Administration 29 CFR Part 2550
Hearing on Reasonable Contracts or Arrangements Under Section 408(b)(2)--Fee Disclosure
AGENCY: Employee Benefits Security Administration, U.S. Department of
Labor.
ACTION: Notice of hearing.
SUMMARY: Notice is hereby given that the Department of Labor will hold a hearing on the Department's proposed regulation under section 408(b)(2) of the Employee Retirement Income Security Act of 1974
(ERISA) and the related proposed class exemption.
DATES: The hearing will be held on March 20, 2008, and March 21 (if necessary), beginning at 9 a.m., EST.
ADDRESSES: The hearing will be held at the U.S. Department of Labor,
Room S-4215 A-C, 200 Constitution Avenue, NW., Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT: Fil Williams, Office of Regulations and Interpretations, Employee Benefits Security Administration, (202) 693-8510. This is not a toll-free number.
SUPPLEMENTARY INFORMATION: On December 13, 2007, notice was published in the Federal Register (72 FR 70988) that the Department of Labor (the
Department) has under consideration a proposal to amend its regulation 29 CFR 2550.408b-2(c) under ERISA section 408(b)(2) relating to the provision of services to employee benefit plans. The proposed regulation would provide that a ``reasonable'' contract or arrangement under ERISA section 408(b)(2) \1\ between an employee benefit plan and certain service providers must include, among other things, certain disclosures concerning service provider compensation and conflicts of interest.\2\
\1\ Section 408(b)(2) of ERISA provides relief from the prohibited transaction rules for service contracts or arrangements between a plan and a party in interest if the contract or arrangement is reasonable, the services are necessary for the establishment or operation of the plan, and no more than reasonable compensation is paid for the services. Regulations issued by the
Department clarify each of these conditions to the exemption. See 29
CFR Sec. 2550.408b-2.
\2\ Currently, the regulation at 29 CFR Sec. 2550.408b-2(c) states only that a contract or arrangement is not reasonable unless it permits the plan to terminate without penalty on reasonably short notice.
Specifically, upon adoption, the proposal would require contracts and arrangements between employee benefit plans and certain providers of services to such plans to be in writing and to include provisions to ensure certain disclosures to enable the plan fiduciary to assess the reasonableness of compensation or fees that the service provider would receive (from the plan and third parties) in connection with services rendered to the plan. The disclosures are also designed to enable the plan fiduciary to evaluate potential conflicts of interest that may affect the service provider's performance under the contract or arrangement.
In the notice of proposed regulation, the Department invited all interested persons to submit written comments on or before February 11, 2008. To date, the Department has received approximately 90 written comments on the proposal, many of which were from major industry groups and plan fiduciaries. All written comments are available to the public, without charge, online at http://www.dol.gov/ebsa and at the Public
Disclosure Room, N-1513, Employee Benefits Security Administration,
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210.
In addition, the Department published in the Federal Register on
December 13, 2007 (72 FR 70893), a notice of proposed class exemption that would provide relief from certain prohibited transaction restrictions of ERISA. The proposed class exemption would relieve the responsible plan fiduciary from any liability for a prohibited transaction that would result from entering into a contract or arrangement for the provision of services when the service provider failed to comply with the
Page 10406
proposed regulation. The Department proposed the class exemption on its own motion pursuant to section 408(a) of ERISA, and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836,
August 10, 1990).
In the notice of proposed exemption, the Department invited interested persons to submit written comments on or before February 11, 2008. The Department has received separate written comments on the proposed exemption, in addition to those comments made as part of information received from the public on the proposed regulation.
In view of the importance of these initiatives and their potential for significantly affecting the provision of services to employee benefit plans, the Department has decided to hold a public hearing. The primary purpose of this hearing is to further develop the public record regarding the regulation and the class exemption and to assist the
Department to understand the issues involved. The hearing will be held on March 20, 2008, and March 21, if necessary, beginning at 9 a.m. and ending at 5 p.m., EST, in Room S-4215 A-C of the Department of Labor,
Francis Perkins Building, at 200 Constitution Avenue, NW., Washington,
DC 20210.
Persons interested in presenting testimony and answering questions at this public hearing must submit, by 3:30 p.m., EST, March 10, 2008, the following information: (1) A written request to be heard; and (2)
An outline of the topics to be discussed, indicating the time allocated to each topic. To facilitate the receipt and processing of responses,
EBSA encourages interested persons to submit their requests and outlines electronically by e-mail to e-ORI@dol.gov. Persons submitting requests and outlines electronically are encouraged not to submit paper copies. Persons submitting requests and outlines on paper should send or deliver their requests and outlines (preferably at least three copies) to the Office of Regulations and Interpretations, Employee
Benefits Security Administration, Attn: 408(b)(2) Hearing, Rooms N- 5655, U.S. Department of Labor, 200 Constitution Avenue, NW.,
Washington, DC 20210. All requests and outlines submitted to the
Department will be available to the public, without charge, online at http://www.dol.gov/ebsa and at the Public Disclosure Room, N-1513,
Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210.
The Department will prepare an agenda indicating the order of presentation of oral comments and testimony. In the absence of special circumstances, each presenter will be allotted ten (10) minutes in which to complete his or her presentation.
Any individuals with disabilities who may need special accommodations should notify Fil Williams on or before March 10, 2008.
Information about the agenda will be posted on http://www.dol.gov/ ebsa on or after March 10, 2008, or may be obtained by contacting Fil
Williams, Office of Regulations and Interpretations, Employee Benefits
Security Administration, U.S. Department of Labor, telephone (202) 693- 8510 (this is not a toll-free number).
Those individuals who make oral comments and testimonies at the hearing should be prepared to answer questions regarding their information and/or comments. The hearing will be transcribed.
Notice of Public Hearing
Notice is hereby given that a public hearing will be held on March 20, 2008, and March 21, if necessary, concerning the Department's proposed regulation under section 408(b)(2) of ERISA and the related proposed class exemption. The hearing will be held beginning at 9 a.m. in Room S-4215 A-C of the U.S. Department of Labor, Francis Perkins
Building, 200 Constitution Avenue, NW., Washington, DC 20210.
Signed at Washington, DC, this 21st day of February 2008.
Bradford P. Campbell,
Assistant Secretary, Employee Benefits Security Administration, U.S.
Department of Labor.
FR Doc. E8-3601 Filed 2-26-08; 8:45 am
BILLING CODE 4510-29-P
