SilverLink - Spring/Summer 2008 - (Page 18)

Also, under the proposed regulation, a service provider contract must require the provider to disclose any information related to the contract and the provider’s fees and compensation that are required by the ﬁduciary must comply with the reporting and disclosure obligations of Title I of ERISA. Unclear in the regulations are arrangements between a plan and its third-party service providers which are not governed by contract. Many plan/provider relationships have never been put into writing, and instead, service providers are being paid by insurance carriers or vendors based upon broker or agent agreements. It is a conservative assumption that the proposed regulations intend such arrangements to be subject to the plan ﬁduciary obligations. As soon as practical, it is advisable that ﬁduciaries gain an understanding of all compensation methodologies to ascertain the appropriateness of the arrangement. Conflicts of Interest The proposed regulations also require service providers to disclose actual or potential conﬂicts of interest to plan ﬁduciaries. Under the proposals, a service provider would have to admit: • • • • its participation or interest in transactions to be entered into by the plan pursuant to the service contract. material relationships with other parties which have the potential for a conﬂict of interest. compensation it may receive that the provider can affect without prior approval by an independent ﬁduciary. the provider’s policies and procedures to address potential conﬂicts of interest. Material Changes Finally, if any of the information disclosed by the provider changes materially, the proposed regulations require the service provider to disclose those changes to ﬁduciaries within 30 days of the change. Proposed Class Exemption The proposals emphasize that a service contract or arrangement that fails to require disclosure of the fees, compensation and conﬂict of interest information described in the proposed regulation will not be “reasonable.” The contract or arrangement will, therefore, not qualify for exemption from ERISA’s prohibited transaction rules and the plan’s ﬁduciaries will have participated in a prohibited transaction. The provider will be subject to excise taxes (if applicable) under Internal Revenue Code §4975. SilverStone Group takes its responsibilities as a party in interest seriously and addresses such issues with each client to ensure compliance. If you have any questions, please contact your Account Manager. 1 Quote from www.erisarulesandregulations.com, “ERISA Rules and Regulations,” accessed April 7, 2008. CONTACT TONY SORRENTINO AT 402.96 4.5 470 OR TSORRENTINO @ SSGI.COM 18 http://www.erisarulesandregulations.com

Table of Contents Feed for the Digital Edition of SilverLink - Spring/Summer 2008

SilverLink - Spring/Summer 2008 Contents Risk Management: Mitigate & Educate Disastrous Distractions Accounts Receivable BoomerCare Risk Reduction, What’s Your Function? Time Out! Double Down Employee Benefits: Who’s Paying Whom for What? Time to Reconcile Keep Your Eye on the Pension Prize Show Me the Money Private Client Services: A Generous Strategy Is There Any Good News Left? Special Insurance for Special Times Client Spotlight: Omaha Performing Arts Internal Happenings: SilverStone Group Wellness Activities Group

SilverLink - Spring/Summer 2008

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