The current regulations state that consultants and investment advisers are generally not considered fiduciaries unless they exercise discretionary authority or control over a plan’s investment transactions or meet a five-part standard. One of the major concerns with these current fiduciary regulations is that they don’t require consultants to disclose all of their compensation arrangements to plan sponsors. Many consultants will avoid fiduciary duties by stating in their contracts that they provide information and non-fiduciary advice to plan sponsors who have fiduciary responsibility over the plan. Another concern is the third-party payments that some investment consultants receive when retirement funds hire money managers recommended by the consultants. Plan sponsors can expect more protection from financial advisers and consultants that act imprudently by subjecting them to ERISA regulations.

Joe Goodmiller

This additional guidance is the result of the feedback that the EBSA received from the employee benefit community and contains 25 frequently asked questions on the Schedule C requirements.  It covers such subjects as whether promotional gifts are reportable, how an ERISA fee recapture account should be treated and if the expenses of an entity that provides services to an employee benefit plan to conduct an education conference at no cost to the plan sponsor’s personnel has to be reported as non-monetary compensation.

The initial guidance about the Schedule C requirements published by the EBSA in July 2008 contains 40 frequently asked questions on the Schedule C requirements covering topics such as if it is required to be reported on the Schedule C if a person providing services to the plan is provided a meal or other entertainment based on a general business relationship that includes both ERISA and non-ERISA business and under what circumstance is a service provider expected to be identified on Schedule C for failing to provide information necessary to complete the Schedule C.

The complete listing of the new frequently asked questions and answers about the Schedule C requirements released in October 2009 can be reviews on the EBSA’s website at http://www.dol.gov/ebsa/faqs/faq-sch-C-supplement.html.

The initial frequently asked questions and answers about the Schedule C requirements released in July 2008 can be viewed on the EBSA’s website at: http://www.dol.gov/ebsa/faqs/faq_scheduleC.html.

Shannon Titch, CPA