Release Notice

Release Date: June 22, 2012

Fee Disclosure:

The Employee Retirement Income Security Act (ERISA) requires that Plan Fiduciaries, when selecting and monitoring service providers and plan investments, act prudently and in the sole interest of the plan's participants and beneficiaries. The plan fiduciaries must also ensure that arrangements with their service providers charge reasonable fees and other compensation for services being provided to the plan.

The Department of Labor (DOL) has issued regulations that require service providers to disclose certain information to plan sponsors. In addition, plan sponsors must disclose certain information to eligible plan participants. These new regulations will help ensure plan sponsors, participants and beneficiaries have the information they need to make informed retirement planning decisions.

Covered Service Providers have until July 1, 2012 to be in compliance with the Department of Labor's (DOL's) 408(b)(2) regulation, which requires disclosing information about fees and services to plan sponsors who offer Employee Retirement Income Security Act (ERISA) plans. Under 404(a)(5), plan sponsors have until August 30, 2012 to provide fee information to participants.

The purpose of the DOL's 408(b)(2) regulations on Fee Disclosure is to ensure that retirement Plan Fiduciaries are provided with the information from a Covered Service Provider, such as ExpertPlan, that they need to assess both the reasonableness of the compensation being paid for plan services and potential conflicts of interest that may affect the performance of those services. Furthermore, Participant Fee Disclosure under the DOL's 404a-5 regulations ensure that all participants and beneficiaries in participant directed individual account plans have the information they need to make informed decisions about the management of their individual accounts and the investment of their retirement savings.

ExpertPlan is pleased to announce that we have been in compliance with 408(b)(2) -Covered Service Provider Disclosure to Plan Fiduciaries (the "Disclosure") requirements through new system features and enhancements.. On June 22, 2012 ExpertPlan will make available the information needed to fulfill 404a-5 Fee Disclosure requirements, well in advance of the August 30, 2012 deadline.

408(b)(2) - Reasonable Contract or Arrangement Under 408(b)(2) - Fee Disclosure

Features and Enhancements

  1. The Disclosure is now available to Plan Fiduciaries on their Plan's website
  2. The inclusion of the Compensation Disclosure within the online Proposal
  3. Morningstar fund prospectus links

Disclosure information includes:

  1. A description of the services available to the plan and the cost for those services
  2. Information about the plan's investments, covering such items as:

FAQs

Q1. When must the Disclosure be made available to Plan Fiduciaries? Covered Service

Providers have until July 1, 2012 to be in compliance with the Department of Labor's (DOL's) 408(b)(2) regulation, which requires disclosing information about fees and services to plan sponsors of Employee Retirement Income Security Act (ERISA) plans. Under 404a-5 plan sponsors have until August 30, 2012 to provide fee information to participants.

Q2. Where on my Plan website is the 408(b)(2) Notice located?

Plan Sponsor's through their online access can locate the 408(b)(2) Notice in the Section Guide's left sidebar by clicking the "Fee Disclosure" link. Financial Advisors and Third Party Administrators working with a Plan Sponsor can locate the Notice by clicking the "Access Your Plans" link on the Section Guide sidebar navigation and then select the name of the plan to be referenced, followed by "Fee Disclosure".

Q3. Which Plans are subject to the 408(b)(2) Notice?

The regulations apply to "Employee Pension Benefit Plans," also referred to as "pension plans," as defined by Title I of ERISA. A pension plan includes all qualified plans such as defined contribution plans that are subject to Title I of ERISA. The size of the plan and whether the plan provides for participant-direction of investment are irrelevant. A plan subject to the regulations is referred to as a "covered plan."These plans include qualified plans such as 401(k) and ERISA 403(b).

The regulations do not apply to IRAs, SEPs and SIMPLE IRAs or plans that are exempt from Title I: Governmental plans, non-electing Church plans, plans maintained solely to comply with applicable workmen's compensation, unemployment compensation or disability insurance laws, "foreign" plans, and unfunded excess benefit plans. In addition, the regulations do not apply to Owner-only plans and Deferral-only 403(b) plans that satisfy the DOL regulatory Title I exemption for 403(b) plans with limited employer involvement however ExpertPlan is providing a Fee Disclosure for these types of plans, as well.

Q4. Who is a Covered Service Provider (CSP)?

A covered service provider is a service provider that: (a) enters into a contract or arrangement with the plan; and (b) reasonably expects to receive at least $1,000 (directly or indirectly) in connection with one or more of the services described below pursuant to the arrangement. It does not matter whether the services will be provided (or the compensation received) directly by the provider or an affiliate or subcontractor. Affiliates and subcontractors are not covered service providers, except as regards to category (2) below, neither are investment products in which the plan invests.

The categories of services covered are: (1) services provided directly by ERISA fiduciaries to the plan; (2) services provided as fiduciaries to investment products in which the plan invests directly and which constitute "plan assets;" (3) services provided directly to the plan as a Registered Investment Advisor; (4) recordkeeping or brokerage services to a participant directed defined contribution plan if one or more investment alternatives will be made available (e.g. through a platform or similar mechanism) in connection with such recordkeeping services or brokerage services and (5) certain other service providers who reasonably expect to receive indirect compensation in connection with their services. This final category includes those who receive indirect compensation for accounting, auditing, actuarial, appraisal, banking, consulting, custodial, insurance, investment advisory (for plan or participants), legal, recordkeeping, securities or other investment brokerage, third party administration, or valuation services. Consulting is limited to the development or implementation of investment policies or objectives, or the selection or monitoring of service providers or plan investments. Payments by the plan or plan sponsor are not indirect compensation.

Q5. What information must a CSP disclose?

Under the regulation, CSP must disclose in writing the following information:

Q6. When must the 408(b)(2) Notice be provided to the Plan Fiduciaries?

The CSP must make the 408(b)(2) Notice reasonably in advance of the date the arrangement is entered into, extended or renewed. So that ExpertPlan is always compliant with the regulation, the 408(b)(2) Notice will be added to the services agreement found within our proposal.

If there is a change to any of the information being provided in the 408(b)(2) Notice, the CSP must disclose it as soon as practical, but not later than 60 days from the date the provider is informed of the change. In most cases, ExpertPlan will be aware of any changes made to Plan or Participant fees and will make the requisite disclosure within the 60 day time period. However, ExpertPlan may not be aware of relevant changes made to the Plan's investment selections. Therefore, so that ExpertPlan is always compliant with the regulations, an email will be sent to the Plan Sponsor every 60 days after the July 1, 2012 effective date.

Q7. Is ExpertPlan a CSP?

Yes, ExpertPlan provides a recordkeeping software platform to defined contribution plans that permits participants to direct their investments.

Q8. What are recordkeeping services?

The regulations define "recordkeeping services" as services related to plan administration and monitoring of plan and participant transactions; and maintenance of the plan and participant accounts, records and statements. Examples of plan and participant transactions include enrollment, payroll deductions and contributions, offering designated investment alternatives and other plan investments, loans, withdrawals and distributions.

Q9. What are the various types of fees and other compensation?

The CSP must make compensation disclosures relating to four different categories of compensation:

  1. Direct Compensation - is any compensation the CSP or affiliate receives directly from the plan.
  2. Indirect compensation - is any compensation received from any source other than the plan, the plan sponsor, the CSP, an affiliate, or a subcontractor (if the subcontractor receives compensation in connection with the subcontractor's services under the contract).
  3. Compensation paid among related parties -is any compensation paid among the CSP, its affiliate, or its subcontractor if the compensation: (1) is set on a transaction basis (e.g. commissions, soft dollars, finder's fees or other similar incentive compensation based on business placed or retained); or (2) is charged directly against the covered plan's investment and reflected in the net value of the investment (e.g. 12b-1 fees).
  4. Compensation for contract termination - any compensation received in connection with termination of the contract or arrangement between the CSP and the plan.

Q10. What information regarding the Designated Investment Alternatives must be disclosed by the CSP?

The following investment-related information must be provided:

404a-5 - The Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plan (the "Fee Disclosure Notice")

Q1. What is the purpose of the Fee Disclosure Notice?

ERISA requires the disclosure of certain plan and investment-related information, including fee and expense information; to participants and beneficiaries (collectively referred to as the "participants") in participant-directed individual account plans (e.g. 401(k) plans). This regulation is intended to ensure that all participants in participant directed individual account plans have the information they need to make informed decisions about the management of their individual accounts and the investment of their retirement savings.

Q2. When must the Fee Disclosure Notice be made available to the participants?

There are two (2) notices that must be provided:

  1. The Initial Annual - This must be provided to all currently eligible participants by August 30, 2012 and non-eligible employees on or before the date on which they can first direct their investments and then every year thereafter.
  2. The Initial Quarterly - This must be provided by November 14, 2012 and every quarter thereafter.

The Fee Disclosure Notice must be provided to all eligible participants even those who have not enrolled in the plan at least annually.

Q3. What information must be contained in the Annual Fee Disclosure Notice?

The regulations require that the following information be provided:

Q4. Must the Fee Disclosure Notice include investment information for the designated investment alternatives offered by a plan?

Yes.

Q5. Who is responsible for providing the Fee Disclosure Notice to the participants?

It is the responsibility of the Plan Sponsor/Administrator to provide the Fee Disclosure Notice to the participants. However, ExpertPlan, on the behalf of the Plan Sponsor/Administrator will make the Fee Disclosure Notice available to certain participants.

Q6. How will the Annual Fee Disclosure Notice be made available to the participants?

ExpertPlan has added to the Participant Portal page, a new Section Guide sidebar link titled: "Fee Disclosure" that when clicked will display the Fee Disclosure Notice. This link will also be available on the Plan Sponsor Portal page as a sub-link to the existing "Fee Disclosure" link.

Q7. How will ExpertPlan inform the participants that the Annual Fee Disclosure Notice in available?

In Aug 2012 ExpertPlan will send an e-mail (the "Notice E-mail") to every participant with an account in your plan and every year thereafter.

The Notice E-mail will not be sent to the following participants:

It will be the Plan Sponsor/Administrator's responsibility to provide a copy of the Fee Disclosure Notice to the above referenced participants. ExpertPlan will inform newly eligible participants about the Fee Disclosure Notice as part of their Eligibility E-mail.

Q8. How will ExpertPlan inform the participants about the Quarterly Fee Disclosure Notice?

There will be information about the Quarterly Fee Disclosure Notice in the Notice E-mail.

Q9. How will the Quarterly Fee Disclosure Notice be provided to the Participants?

ExpertPlan has added a new section to the quarterly participant statement titled: "Fee Detail". This section will itemize all of the fees which were paid by the participant for the quarterly statement period in accordance with the 404a-5 regulations. This change has been made to both the paper and on-line statements.

OTHER FEE DISCLOSURE FEATURES

408(b)(2) - Covered Service Provider Disclosure

To allow the Fiduciary/Plan Sponsor the ability to account for and disclose plan expenses paid to other Covered Service Providers from the plan or the participant accounts, ExpertPlan developed Schedule E for the plan sponsor's convenience. Sponsors can access Schedule E by following these steps:

  1. After you log on to your plan, in the Section Guide, click the "Fee Disclosure" link on the sidebar.
  2. The "Fee Disclosure View Selection" webpage will be presented. On that page, in the "Fee Disclosure Views" section, click the "Fiduciary Fee Disclosure 408(b)(2)" link.
  3. The "Compensation Disclosure Form" webpage will be presented. On that page, in the "Types of Compensation" section, click the "Compensation to Other Service Providers - See Schedule E" link.
  4. On the next webpage, click the "Add" button and begin entering the fees.

404a-5 - Designated Investment Advisor Disclosure

One of the requirements under 404a-5 is to display the name of the plan's Designated Investment Advisor which is defined as follows:

"A designated investment manager ("DIM") is a section 3(38) investment manager that is designated by a plan fiduciary and made available to participants and beneficiaries to manage all or a portion of the assets held in, or contributed to, their individual accounts. When participants appoint a DIM to manage all or a portion of their individual accounts, the DIM becomes responsible for investing their accounts on a participant-by-participant basis." If your plan has a DIM as defined above, ExpertPlan has developed a method to add that information to the Fee Disclosure Notice by following these steps:

  1. After you log on to your plan, in the Section Guide, click the "Fee Disclosure" link on the sidebar.
  2. The" Fee Disclosure View Selection" webpage will be presented. On that page, in the "Fee Disclosure Views" section, click the "Participant Fee Disclosure 404a-5" link.
  3. The "Participant Fee Disclosure" webpage will be presented. On that page, in the "Designated Investment Manager" section, click "The Plan has an Investment Manager" radio button. Once clicked, a data entry box will appear - enter the name of the DIM.

The name of your DIM will now appear in the "General Information about your Plan" section under "The Designated Investment Manager".

ExpertPlan has developed quick access links to fee disclosure information through the Financial Advisor, Third Party Administrator, Private Label Coordinator and Plan Sponsor website portals. For access details please review the attached user's guide.

Fee Disclosure Website Portal User's Guide