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408(b)(2) FEE DISCLOSURE By: Kathy K. Walker, VP S impkins & A ssociates

408(b)(2) FEE DISCLOSURE By: Kathy K. Walker, VP S impkins & A ssociates. DISCLOSURE………………. The information provided in this presentation is based upon complex requirements of the IRS and Treasury Regulations.

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408(b)(2) FEE DISCLOSURE By: Kathy K. Walker, VP S impkins & A ssociates

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  1. 408(b)(2) FEE DISCLOSURE By:Kathy K. Walker, VP Simpkins & Associates

  2. DISCLOSURE………………. • The information provided in this presentation is based upon complex requirements of the IRS and Treasury Regulations. • Although care has been taken to present the material accurately, S&A disclaims any implied or actual warranties as to the accuracy of any material herein or completeness and any liability with respect thereto. • Neither S&A nor its representatives give legal, tax or financial advice. • This PowerPoint is intended to be used as an executive summary or overview.

  3. 408(b)(2)Fee Disclosure • Proposed regs issued December 13, 2007 • Department of Labor published interim final rule – July 16, 2010 • An interim final rule is a binding rule • Can be replaced by a final rule following the comment period • Effective July 1, 2012

  4. 408(b)(2)Fee Disclosure • The final rule applies to “covered plans” • Which plans are “covered plans” • Which plans are excluded

  5. 408(b)(2)Fee Disclosure • The final rule will apply to all contracts between covered plans and covered service providers in effect on July 1, 2012

  6. 408(b)(2)FEE DISCLOSURE • Form 5500 – Schedule C • Form 5500 – Schedule A

  7. 408(b)(2)FEE DISCLOSURE • Must be in writing and include a description of the following: • Services to be provided • Direct compensation • Indirect compensation • Any compensation that will be paid to the service provider • Transaction basis • Charged against the plan’s investment and reflected n the net value of the investment

  8. 408(b)(2)FEE DISCLOSURE • Must be in writing – cont’d • Any compensation that will be paid with the termination of a contract • The manner in which the compensation will be paid • Any compensation that will be charged directly against the amount invested • The annual operating expenses • Any ongoing expenses in addition to the annual operating expenses

  9. 408(b)(2)FEE DISCLOSURE • Bundled Services • Unbundling Fees

  10. 408(b)(2)FEE DISCLOSURE • Exemption for Plan Fiduciary • Prohibited Transaction • Failure to comply

  11. 404(a)(5)FEE DISCLOSURE • Fee Disclosure to plan participants

  12. Participant Fee Disclosure • Final Rule Overview • Fiduciary Act • Participant Directed Accounts • Notices

  13. Participant Fee Disclosure • Effective Date: July 1, 2012 • Notice Required: August 30, 2012 • Participant Statements: November 14, 2012 (45 days following end of quarter)

  14. Participant Fee Disclosure • Plan Related Information • General • Circumstances under which participants and beneficiaries may give investment instructions • Specific limitations on such instructions • Plan provisions relating to the exercise of voting rights (and restrictions) • Identification of designated investment alternatives offered • Identification of any designated investment managers

  15. Participant Fee Disclosure • Plan Related Information • General • Description of any “brokerage windows” that allow participants and beneficiaries to select investments outside those designated by the plan. • Administrative Expenses • Fees and expenses not included in the total operating expenses of any designated investment alternative

  16. Participant Fee Disclosure • Plan Related Information • Administrative Expenses • How will it be allocated • Revenue Sharing, 12(b)-1 fees, sub transfer agent fees, etc. • Individual Expenses • Explanation of any fees or expenses based on actions taken by the participant, such as loans and QDRO’s

  17. Participant Fee Disclosure • Investment Related Information • Identifying Information • The name of each designated investment alternative • Type or category of the investment

  18. Participant Fee Disclosure • Investment Related Information • Performance Data • Investments without a fixed rate of return • Average annual return for 1, 5 and 10 year calendar periods • Includes money market mutual funds and stable value funds • Investments with a fixed rate • The fixed or stated rate of return and the term of the investment

  19. Participant Fee Disclosure • Investment Related Information • Benchmarks • Investments without a fixed rate of return • Name and returns of an appropriate broad-based securities market index of the preceding 1,5 and 10 year calendar returns

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