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Approaching V1: Decision Time for Complying With 408(b)(2)

Posted on Dec 30, 2011 by  in Changes in the Law: What You Should Know, Financial Advisor Corner

In aviation there is a speed beyond which a pilot can no longer abort a takeoff and must continue airborne even in the event of an engine failure.  This speed is known as “V1” or “the takeoff decision speed.”  Retirement plan advisors required to provide disclosures under the Department of Labor’s (DOL) impending service provider disclosure regulations are quickly approaching their own type of V1 decision time. 

Are you going to be ready for 408(b)(2)?

While the final regulations have still not been released, the deadline to comply is only three months away.  Even though the final regulations are expected to contain little in the way of surprises, there is speculation that the final regulations may include some additional requirements that were not in the interim final regulations (such as a new summary disclosure requirement).  If the final regulations are not released in the very near future, retirement plan advisors will be faced with a tough decision: proceed in finalizing their own disclosures based on the requirements in the interim final regulations (takeoff) or await the release of the final regulations and assume that the DOL will further delay the effective date (pull the power and hit the brakes).    

 The American Society of Pension Professionals & Actuaries (ASPPA) has recently called on the DOL to delay the effective date of the regulations until one year after they are finalized.  While ASPPA is a respected and powerful voice in the retirement plan world, the DOL will probably be reluctant to once again extend the effective date after having done so several times already.  With that reality in mind, what are your plans for complying with the service provider disclosures?  If you ask me, I think that it is time to fly!

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