The Interim Final Employee Retirement
Income Security Act of 1974 (ERISA) section 408(b)(2) regulation
would provide relief for certain arrangements between plans and
service providers that ERISA section 406(a)(1)(C) otherwise
proscribes. To obtain this relief, the arrangement between a plan
and a service provider must satisfy several criteria: the services
must be necessary for the establishment or operation of the plan
and the plan may pay no more than reasonable compensation for the
services. The Department is also issuing a prohibited transaction
class exemption in conjunction with the interim final rule. The
class exemption grants plan fiduciaries relief from liability for a
prohibited transaction resulting from the service providers
failure to comply with section 408(b)(2). The Department recognizes
that a plan fiduciary may on occasion unknowingly conclude a
contract or arrangement that does not meet the requirements of the
regulation for relief under ERISA section 408(b)(2), in the
reasonable belief that the service provider has already divulged
the requisite information. This act would constitute a prohibited
transaction by both the service provider and the plan fiduciary,
but for the availability of the proposed class exemption. Under the
interim final rule, for a contract or arrangement to be
reasonable, a potential service provider must disclose to a plan
in writing certain information before the plan may enter into,
extend, or renew the contract or arrangement. Failure to comply
with the proposed regulation would result in a prohibited
transaction both under ERISA section 406(a) (1) (C) and under
section 4975(c) (1) (C) of the Internal Revenue Code.
US Code:
29
USC 1108 Name of Law: Employee Retirement Income Security
Act
The hour and cost burden result
from new information collection requirements.
$0
No
No
Uncollected
Uncollected
No
Uncollected
Chris Cosby 202
693-8540
No
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
Proposed Class Exemption Notice to Department of Labor