[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]
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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.
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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\
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\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.
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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