Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 13949 

in this document would be 

subsequently published in the Order. 

The FAA has determined that this 

proposed regulation only involves an 

established body of technical 

regulations for which frequent and 

routine amendments are necessary to 

keep them operationally current. 

Therefore, this proposed regulation: (1) 

Is not a ‘‘significant regulatory action’’ 

under Executive Order 12866; (2) is not 

a ‘‘significant rule’’ under Department of 

Transportation (DOT) Regulatory 

Policies and Procedures (44 FR 11034; 

February 26, 1979); and (3) does not 

warrant preparation of a regulatory 

evaluation as the anticipated impact is 

so minimal. Since this is a routine 

matter that will only affect air traffic 

procedures and air navigation, it is 

certified that this proposed rule, when 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities under the 

criteria of the Regulatory Flexibility Act. 

The FAA’s authority to issue rules 

regarding aviation safety is found in 

Title 49 of the United States Code. 

Subtitle I, Section 106 describes the 

authority of the FAA Administrator. 

Subtitle VII, Aviation Programs, 

describes in more detail the scope of the 

agency’s authority. 

This rulemaking is promulgated 

under the authority described in 

Subtitle VII, Part A, Subpart I, Section 

40103. Under that section, the FAA is 

charged with prescribing regulations to 

assign the use of the airspace necessary 

to ensure the safety of aircraft and the 

efficient use of airspace. This regulation 

is within the scope of that authority as 

it modifies the route structure as 

necessary to preserve the safe and 

efficient flow of air traffic in the 

northeastern United States. 

Environmental Review 

This proposal will be subject to an 

environmental analysis in accordance 

with FAA Order 1050.1E, 

‘‘Environmental Impacts: Policies and 

Procedures’’ prior to any FAA final 

regulatory action. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Proposed Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

proposes to amend 14 CFR part 71 as 

follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for part 71 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40103, 40113, 

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959– 

1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of FAA Order 7400.9X, 

Airspace Designations and Reporting 

Points, dated August 7, 2013 and 

effective September 15, 2013, is 

amended as follows: 

Paragraph 2004—Jet Routes 

* * * * * 

J–64 [Amended] 

From Los Angeles, CA, via INT Los 

Angeles 083° and Hector, CA, 226° radials; 

Hector; Peach Springs, AZ; Tuba City, AZ; 

Rattlesnake, NM; Pueblo, CO; Hill City, KS; 

Pawnee City, NE; Lamoni, IA; Bradford, IL; 

via the INT of the Bradford 089° and the Fort 

Wayne, IN, 280° radials; Fort Wayne; 

Ellwood City, PA; Ravine, PA; to INT Ravine 

102°(T)/113°(M) and Lancaster, PA, 044°(T)/ 

053°(M) radials. 

J–77 [Removed] 

J–80 [Amended] 

From Oakland, CA; Manteca, CA; Coaldale, 

NV; Wilson Creek, NV; Milford, UT; Grand 

Junction, CO; Red Table, CO; Falcon, CO; 

Goodland, KS; Hill City, KS; Kansas City, 

MO; Spinner, IL; Brickyard, IN; to Bellaire, 

OH. 

Issued in Washington, DC, on March 6, 

2014. 

Donna Warren, 

Acting Manager, Airspace Policy and 

Regulations Group. 

[FR Doc. 2014–05356 Filed 3–11–14; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2550 

RIN 1210–AB53 

Amendment Relating to Reasonable 

Contract or Arrangement Under 

Section 408(b)(2)—Fee Disclosure 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Proposed rule. 

SUMMARY: This document contains a 

proposed amendment to the final 

regulation under the Employee 

Retirement Income Security Act of 1974 

(ERISA or the Act) requiring that certain 

service providers to pension plans 

disclose information about the service 

providers’ compensation and potential 

conflicts of interest. The amendment 

would, upon adoption, require covered 

service providers to furnish a guide to 

assist plan fiduciaries in reviewing the 

disclosures required by the final rule if 

the disclosures are contained in 

multiple or lengthy documents. This 

amendment will affect pension plan 

sponsors and fiduciaries and certain 

service providers to such plans. 

DATES: Written comments on the 

proposed amendment should be 

received by the Department on or before 

June 10, 2014. 

ADDRESSES: Written comments may be 

submitted to the addresses specified 

below. All comments will be made 

available to the public. Warning: Do not 

include any personally identifiable 

information (such as name, address, or 

other contact information) or 

confidential business information that 

you do not want publicly disclosed. All 

comments may be posted on the Internet 

and can be retrieved by most Internet 

search engines. Comments may be 

submitted anonymously. Comments 

may be submitted to the Department of 

Labor, identified by RIN 1210–AB08, by 

one of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Email: e-ORI@dol.gov. 

• Mail or Hand Delivery: Office of 

Regulations and Interpretations, 

Employee Benefits Security 

Administration, Room N–5655, U.S. 

Department of Labor, 200 Constitution 

Avenue NW., Washington, DC 20210, 

Attention: RIN 1210–AB08; 408(b)(2) 

Guide. 

Comments received by the 

Department of Labor may be posted 

without change to http://

www.regulations.gov and http://

www.dol.gov/ebsa, and made available 

for public inspection at the Public 

Disclosure Room, N–1513, Employee 

Benefits Security Administration, 200 

Constitution Avenue NW., Washington, 

DC 20210. 

FOR FURTHER INFORMATION CONTACT: 

Allison Wielobob, Office of Regulations 

and Interpretations, Employee Benefits 

Security Administration, (202) 693– 

8500. This is not a toll-free number. 

SUPPLEMENTARY INFORMATION: 

A. Background 

1. General 

On February 3, 2012, the Department 

published a final rule in the Federal 


tkelley on DSK3SPTVN1PROD with PROPOSALS
13950 Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 

1 77 FR 5632 (Feb. 3, 2012); see also the interim 

final rule (75 FR 41600, July 16, 2010) and proposed 

rule (72 FR 70988, Dec. 13, 2007). The ‘‘408(b)(2)’’ 

regulation finalized by the Department addresses 

disclosures that must be furnished before plan 

fiduciaries enter into, extend or renew contracts or 

arrangements for services to certain pension plans. 

The final rule was part of a broader Departmental 

regulatory initiative to improve transparency of 

plan fees to plan fiduciaries, the Department, and 

plan participants and beneficiaries. As part of this 

initiative, the Department also implemented 

changes to the information that must be reported 

concerning service provider compensation as part 

of the Form 5500 Annual Report. These changes to 

Schedule C of the Form 5500 complement the final 

rule by assuring that plan fiduciaries have the 

information they need to monitor service providers 

consistent with their duties under ERISA section 

404(a)(1). See 72 FR 64731; see also frequently 

asked questions on Schedule C, available on the 

Department’s Web site at http://www.dol.gov/ebsa. 

Finally, the Department published a final rule in 

October 2010 requiring the disclosure of specified 

plan and investment-related information, including 

fee and expense information, to participants and 

beneficiaries of participant-directed individual 

account plans. See 75 FR 64910. 

2See 77 FR 5632. 

Register concerning disclosures that 

must be furnished before plan 

fiduciaries enter into, extend or renew 

contracts or arrangements for services to 

certain pension plans in order for such 

a contract or arrangement to be 

‘‘reasonable,’’ as required by ERISA 

section 408(b)(2).1 The final rule was 

effective for covered plans on July 1, 

2012.2 The final rule was designed to 

help ensure that pension plan 

fiduciaries are provided the information 

they need to assess both the 

reasonableness of the compensation to 

be paid for plan services and potential 

conflicts of interest that may affect the 

performance of those services. Today, 

the Department is publishing in the 

Federal Register a proposed amendment 

to the final rule under which covered 

service providers would be required to 

furnish a guide along with the initial 

disclosures that must be provided to 

plan fiduciaries in accordance with the 

final regulation, if the initial disclosures 

are contained in multiple or lengthy 

documents. 

2. Public Comments on Interim Final 

Regulation 

In the preamble to the interim final 

rule, the Department requested 

comment on the format of disclosures 

required under the rule. Neither the 

proposal nor the interim final rule 

required covered service providers to 

disclose information in any particular 

format. Further, the preamble to the 

proposal specifically noted that covered 

service providers could use different 

documents from separate sources, as 

long as all of the documents, 

collectively, contained the required 

information. Commenters on the 

proposal disagreed as to whether this 

would lead to a cost-effective and 

meaningful presentation of the required 

information to responsible plan 

fiduciaries. In the preamble to the 

interim final rule, the Department 

explained that it had not determined 

whether it was feasible to provide 

specific and meaningful formatting 

standards. Accordingly, the Department 

requested comment on whether to revise 

the final rule to include a summary 

disclosure or other formatting 

requirement. 

Commenters on the interim final rule, 

as on the proposed rule, continued to 

disagree about the utility of, and 

feasibility of, requiring a summary of, or 

otherwise mandating any particular 

format for the required disclosures. 

Many commenters argued that the 

Department should retain the position 

taken in the proposal and the interim 

final rule, giving covered service 

providers flexibility to determine the 

format of their disclosures. These 

commenters expressed concern that a 

‘‘one-size-fits-all’’ approach could not 

accommodate the enormous variety of 

current pension plan service 

arrangements and likely changes in the 

future. They also believed that the costs 

to pension plans, and the participants 

and beneficiaries of such plans, of such 

an approach will be significant. Some of 

these commenters expressed concern 

that responsible plan fiduciaries would 

rely solely, and thus improperly, on the 

summary, rather than reviewing the 

fuller and more detailed disclosures 

required by the rule. The commenters 

also were concerned that requiring the 

comprehensive disclosures and a 

summary would result in unnecessarily 

duplicative disclosures. In addition, if 

there are discrepancies between the two, 

commenters argued that questions could 

arise over which disclosures would 

govern. These commenters preferred 

that the Department require covered 

service providers to furnish an index or 

‘‘roadmap’’ to the disclosures. 

Commenters also suggested that any 

summary or other formatting 

requirement the Department may adopt 

be flexible and not mandate any 

particular language, formatting, or page 

limits. 

Other commenters, however, 

supported the addition of a summary 

disclosure or similar requirement. They 

argued that plan fiduciaries, especially 

those for small and medium-sized plans, 

often are overwhelmed by highly 

technical disclosures from separate 

sources, especially concerning plan 

investments. These commenters 

suggested placing the burden of 

organizing this information on covered 

service providers, who can do so more 

effectively and at less cost. Further, 

these commenters believe that 

associated costs to service providers 

have been overstated and are likely to be 

minimal following an initial transition 

to compliance with any new summary 

or other formatting requirement. These 

costs, they argued, would be greatly 

outweighed by the benefit of increased 

clarity to responsible plan fiduciaries. 

One commenter, for example, pointed 

out that fuller disclosure will not result 

in increased transparency if the 

information continues to be obscured in 

lengthy, technical documents. Some of 

these commenters suggested 

information that should be contained in 

a separate, summary disclosure 

requirement. 

Following review and analysis of 

these comments, the Department 

decided to reserve paragraph 

(c)(1)(iv)(H) of the final rule, published 

in February 2012. The Department also 

explained its intention to publish, in a 

separate proposal, a guide or similar 

requirement to assist responsible plan 

fiduciaries’ review of the rule’s required 

disclosures. Given the lack of specific 

suggestions or data on how best to 

structure such a requirement, and what 

the real costs of such a requirement 

would be, the Department was not 

prepared, at that time, to implement a 

guide or similar requirement as part of 

the final rule. 

Today, the Department is proposing a 

regulatory provision requiring that 

covered service providers furnish a 

guide along with the initial disclosures 

required by the rule, if the disclosures 

are contained in multiple or lengthy 

documents. The Department believes 

that plan fiduciaries, especially in the 

case of small plans, need a tool to 

effectively make use of the required 

disclosures. The guide being proposed 

in this document provides clarity and 

specificity, while avoiding the 

uncertainty and burdens that some 

commenters argued may accompany 

construction of a ‘‘summary’’ of existing 

documents. The Department believes 

that a required summary without some 

guide to the underlying disclosures 

themselves, could become the primary 

document on which some responsible 

plan fiduciaries rely, which is not the 

Department’s intention. 

The Department is proposing a guide 

requirement in an effort to strike an 

appropriate balance between the need to 

facilitate a responsible plan fiduciary’s 

review of information important to a 

prudent decision-making process and 

the costs and burdens attendant to the 

preparation of a new summary 

disclosure document. The Department 


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Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 13951 

believes that covered service providers 

are best positioned to provide the guide 

in a cost-effective manner, because they 

have the specialized knowledge 

required to determine where the 

required disclosures are located, and 

they generally will be able to structure 

their disclosures so that they need to 

locate the information only once when 

preparing guides for large numbers of 

clients, each of whom otherwise would 

have to locate the information 

separately in the underlying disclosures. 

A guide will assist responsible plan 

fiduciaries for these plans in finding 

information that ERISA requires them to 

assess in evaluating both the 

reasonableness of the compensation to 

be paid for plan services and potential 

conflicts of interest that may affect the 

performance of those services. A guide 

will also reduce the costs they otherwise 

would have incurred searching for such 

information. Anecdotal evidence 

suggests that small plan fiduciaries in 

particular often have difficulty 

obtaining required information in an 

understandable format, because such 

plans lack the bargaining power and 

specialized expertise possessed by large 

plan fiduciaries. Therefore, the 

Department anticipates that the guide 

requirement will be especially 

beneficial to fiduciaries of small and 

medium-sized plans. 

To avoid unnecessary cost to covered 

service providers, the proposal also 

allows for the fact that, in some cases, 

covered service providers may already 

furnish the required disclosures in a 

concise, single document. If that is the 

case, then the covered service provider 

will not be required to provide a 

separate guide to the disclosures. The 

Department believes that initial 

disclosures that are furnished in a 

concise, single document do not present 

the same challenges to responsible plan 

fiduciaries as disclosure that are 

contained in multiple or lengthy 

documents. 

The Department has not been 

convinced by commenters that certain 

required disclosures are more important 

than others, such that the guide, if 

required, should include the location of 

only the most important data. 

Accordingly, the proposed guide 

requires that covered service providers 

disclose the location of all principle 

data elements required as initial 

disclosures. Nothing in the proposed 

amendment, however, would preclude a 

covered service provider from including 

additional information with or as part of 

the guide, as long as such information 

is not inaccurate or misleading. It is not 

the Department’s goal to limit 

innovation in how information is 

effectively communicated to plan 

fiduciaries. Rather, the Department 

believes that the required guide to 

initial disclosures will provide a basic 

framework for ensuring that responsible 

plan fiduciaries understand exactly 

what information is being disclosed to 

them, and where to find such 

information. 

B. Proposed Amendment to Regulations 

Under Section 408(b)(2) 

1. Overview of Proposed Amendment 

The Department proposes to include, 

as paragraph (c)(1)(iv)(H) of the final 

rule, a new requirement that covered 

service providers furnish a guide along 

with the initial disclosures required by 

the rule, if the initial disclosures are 

contained in multiple or lengthy 

documents. This guide will assist 

responsible plan fiduciaries by ensuring 

that the location of all information 

required to be disclosed is evident and 

easy to find among other information 

that is provided. The Department agrees 

that covered service providers are in the 

best position to identify the location of 

information that otherwise may be 

difficult for a responsible plan fiduciary 

to find in multiple, highly technical or 

lengthy disclosure materials. 

Specifically, paragraph (c)(1)(iv)(H) 

provides that, if the information that 

must be disclosed pursuant to paragraph 

(c)(1)(iv)(A) through (G) of the final rule 

(the initial disclosures) is not contained 

in a single document, or if the document 

is in excess of a specified number of 

pages, the covered service provider 

must furnish to the responsible plan 

fiduciary a guide that specifically 

identifies the document and page or 

other sufficiently specific locator, such 

as a section, that enables the responsible 

plan fiduciary to quickly and easily find 

the specified information, as applicable 

to the contract or arrangement. The 

Department has reserved for comment 

the number of pages that will trigger the 

guide requirement even if the initial 

disclosures are furnished in a single 

document. Commenters should address 

whether such a page number 

requirement is an appropriate standard, 

whether standards must be included to 

prevent formatting or other 

manipulation of the page number 

requirement (e.g., by reducing font size 

or margins), what number of pages 

should be included as the standard, and 

whether any alternative standards exist 

that would be more beneficial to 

responsible plan fiduciaries reviewing 

lengthy documents. 

In the Department’s view, merely 

stating, for example, that required 

information is contained in a separate 

service contract or prospectus would 

not be sufficient. This new provision 

requires a specific locator to find the 

required information, including not 

only the identity of the document (to the 

extent disclosure may be contained in 

multiple documents) but also where 

such information is located within the 

document. In common parlance, a 

‘‘guide’’ is a mechanism or tool that 

serves to direct or indicate information, 

or that advises or shows the way. Thus, 

in the context of this proposal, a guide 

would be helpful to the extent it serves 

to direct plan fiduciaries to specific 

relevant information required under the 

regulation. A document and pagination 

requirement represents one approach to 

guide plan fiduciaries by providing 

them with a direct unambiguous point 

of reference to the specific place where 

they could find the information. 

Alternatively, other locators, for 

example, direct links to the required 

information on an Internet/Web page, or 

section identification within a 

document may also be helpful but at the 

same or potentially lower cost. 

Accordingly, the proposal seeks 

comments on the use of two alternate 

locators. Each is equally weighted under 

the proposal. The first is a document 

and page requirement. The Department 

assumes for purposes of this proposal 

that paginated documents are the norm 

for employee benefit contracts and other 

materials subject to disclosure under the 

regulation. The second choice is a 

‘‘sufficiently specific’’ locator, such as a 

section. This alternative is intended to 

be more general, but only to the extent 

still effective. Specifically, in addition 

to specifying the document or 

documents where required disclosures 

are located, the proposal requires that 

the guide identify the ‘‘page or other 

sufficiently specific locator, such as 

section, that enables the plan fiduciary 

to quickly and easily find’’ the required 

information. The Department is neutral 

as between these alternatives because 

either would satisfy the intended 

purpose of the guide—to help plan 

fiduciaries quickly and easily find the 

required disclosures. The proposal’s 

reference to ‘‘section’’ is meant as an 

example, however, and not as a safe 

harbor. Section references, whether by 

name or number or some other method, 

would be acceptable locators only if 

they were sufficiently specific to enable 

plan fiduciaries to quickly and easily 

find the relevant information. The 

proposal allows covered service 

providers to choose pagination or the 

more general alternative. Individuals are 

encouraged to comment on whether a 

final rule, assuming it were to include 


tkelley on DSK3SPTVN1PROD with PROPOSALS
13952 Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 

a guide requirement, should permit a 

choice of locators, as proposed, or 

whether the rule should require only 

one locator, and why. The Department 

also welcomes comments on whether 

page numbers and sections are effective 

and feasible locators, whether 

individually or as alternatives, and 

whether and why other locators may be 

preferable. The Department also 

welcomes comment on other 

mechanisms which could be used in a 

guide to quickly identify relevant 

information for fiduciaries and on the 

benefits and costs of the two options 

outlined here. 

A similar standard applies for 

information disclosed electronically. A 

covered service provider may not 

merely furnish the link to a separate 

contract or to a prospectus. Either a 

more specific link directly to the 

required information must be furnished, 

or a page or other sufficiently specific 

locator, such as a section, must be 

furnished in addition to an electronic 

hyperlink. 

Some interested parties have 

suggested that a guide requiring 

inclusion of a specific page or other 

locator could be difficult and potentially 

very costly to covered service providers 

and plans. The Department is 

particularly interested in comments on 

this issue. The Department asks that 

comments specifically identify such 

challenges and the anticipated cost of 

addressing them, and explain how 

currently available technology can or 

cannot reduce those costs. The 

Department also is interested in whether 

web-based approaches, which allow the 

reader to move readily by hyperlink 

back and forth between related 

information in a summary document 

and the more detailed document or 

documents from which the summary 

was derived, could provide an effective 

alternative for disclosures provided 

electronically. In offering alternatives, 

please explain how they would meet the 

Department’s objective in proposing a 

guide, which is to assist responsible 

plan fiduciaries by ensuring that the 

location of all information required to 

be disclosed is evident and easy to find 

among other information that is 

provided. 

2. Required Elements; Changes to Guide 

If a guide is required, the covered 

service provider must disclose the 

location of: (i) the description of 

services to be provided to the covered 

plan, as required by paragraph 

(c)(1)(iv)(A) of the final rule; (ii) the 

statement concerning services to be 

provided as a fiduciary and/or as a 

registered investment adviser, as 

required by paragraph (c)(1)(iv)(B) of the 

final rule; (iii) the description of all 

direct compensation, as required by 

paragraph (c)(1)(iv)(C)(1) of the final 

rule; (iv) the description of all indirect 

compensation, as required by paragraph 

(c)(1)(iv)(C)(2) of the final rule; (v) the 

description of any compensation that 

will be paid among related parties, as 

required by paragraph (c)(1)(iv)(C)(3) of 

the final rule; (vi) the description of any 

compensation for termination of the 

contract or arrangement, as required by 

paragraph (c)(1)(iv)(C)(4) of the final 

rule; (vii) the description of all 

compensation (and/or a reasonable 

estimate of the cost to the covered plan) 

for recordkeeping services, as required 

by paragraph (c)(1)(iv)(D) of the final 

rule; and (viii) for covered service 

providers described in paragraphs 

(c)(1)(iii)(A)(2) or (c)(1)(iii)(B) of the 

final rule, the description of any 

compensation, annual operating 

expenses, and ongoing expenses (or, if 

applicable, total annual operating 

expenses), set forth in paragraph 

(c)(1)(iv)(E)(1) and (2), as required by 

paragraphs (c)(1)(iv)(E)(1) and (2) and 

(c)(1)(iv)(F)(1) of the final rule. 

The guide also must identify a person 

or office, including contact information, 

that the responsible plan fiduciary may 

use regarding the disclosures provided 

pursuant to the final rule. Paragraph 

(c)(1)(iv)(H)(2). This requirement will 

further assist responsible plan 

fiduciaries by clearly identifying an 

individual or office that the fiduciary 

may contact to the extent he or she has 

difficulty locating any information 

referenced in the guide, or has questions 

concerning the disclosures themselves. 

A required guide must be furnished as 

a separate document. Paragraph 

(c)(1)(iv)(H)(3). The Department’s goal, 

in requiring that the guide be a separate 

document, is to ensure that it is brought 

to the attention of the responsible plan 

fiduciary and prominently featured so 

that the fiduciary can use it effectively 

in his or her review of the required 

disclosures. The Department solicits 

comments on whether the separate 

document requirement, by itself, is 

likely to ensure that the responsible 

plan fiduciary adequately understands 

both the existence and purpose of the 

guide, or whether other conditions are 

needed. For instance, in addition to the 

separate document requirement, would 

the guide be improved by requiring 

specific language, such as an 

introductory statement in the guide as to 

the purpose of the guide? Further, if the 

guide is furnished electronically, for 

example as an attachment to email, 

would responsible plan fiduciaries 

benefit from a notice comparable to the 

notice required pursuant by 29 CFR 

2520.104b–1(c)(1)(iii) (requiring the 

provision of notice to participants at the 

time a document is furnished 

electronically that apprises participants 

of the significance of the document 

when it is not otherwise reasonably 

evident as transmitted). 

Finally, the proposal includes an 

amendment to paragraph (c)(1)(v) of the 

final rule, concerning the disclosure of 

changes to previously disclosed 

information. Specifically, the 

Department proposes to revise 

paragraph (c)(1)(v)(B)(2) of the rule to 

require that changes to the information 

contained in the guide must be 

disclosed, at least annually to 

responsible plan fiduciaries. The 

Department believes that a periodic 

requirement to disclose any changes to 

the information contained in the guide 

will be more beneficial to plan 

fiduciaries and less burdensome to 

covered service providers than ongoing 

and sporadic disclosure each time a 

change to one component of the guide 

occurs. The Department solicits 

comment on whether it would be more 

effective to require that the entire guide 

(rather than only changes to information 

contained in the guide) be disclosed on 

an annual basis, if changes have 

occurred during the preceding year. 

3. Compliance and Delivery 

Several commenters on the interim 

final rule suggested that if the 

Department were to adopt a summary or 

other formatting requirement in the final 

rule, it should provide an illustration of 

how a covered service provider may 

comply with such requirement to 

encourage consistency and allow for 

lower cost alternatives. While the 

Department is not including a model 

guide as part of this publication, the 

Department previously posted on its 

Web site, at www.dol.gov/ebsa/pdf/

408b2sampleguide.pdf, a sample guide 

to initial disclosures that may be useful 

to plan service providers. The guide was 

published as an appendix to the final 

rule as a sample and is an example of 

what the Department believes guides to 

initial disclosures may look like in 

practice. 

In addition, commenters on the 

interim final rule requested guidance on 

the manner of delivering required 

information to responsible plan 

fiduciaries. Nothing in the regulation 

limits the ability of covered service 

providers to furnish information 

required by the regulation to responsible 

plan fiduciaries via electronic media, for 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 13953 

3The Department’s regulations at 29 CFR 

§ 2520.104b–1 apply solely for purposes of 

disclosures from plans to participants and 

beneficiaries and do not extend to disclosures from 

third parties to plan fiduciaries. 

4 72 FR 70988 (December 13, 2007). 

5 77 FR 5632 (February 3, 2012). 

example, on a Web site.3 However, 

unless the information disclosed by a 

covered service provider on a Web site 

is readily accessible to responsible plan 

fiduciaries, and fiduciaries have clear 

notification on how to gain such access, 

the information on the Web site may not 

be regarded as furnished within the 

meaning of the regulation. 

C. Request for Comments 

As discussed above, the Department 

believes that the proposed guide 

requirement strikes an appropriate 

balance between the need to facilitate 

responsible plan fiduciaries’ review of 

information and the costs and burdens 

attendant to preparing such a guide. 

However, the Department invites 

comments from interested persons on 

all aspects of this proposal, including 

the regulatory alternatives discussed in 

Section 4 of the Regulatory Impact 

Analysis, below, that were considered 

by the Department in developing this 

proposal. 

The Department encourages parties to 

provide specific suggestions or data 

concerning the structure of the guide, as 

proposed, and whether its requirements 

are feasible and cost-effective. For 

example, how many (and what types of) 

products and services will require a 

guide? Do economies of scale exist such 

that the guide service providers prepare 

for one product or service could be used 

for multiple clients? Can service 

providers give the Department an 

estimate of the costs they will incur to 

create a guide? While aggregate costs of 

the guide are helpful, commenters are 

strongly encouraged to break down 

these costs into their constituent 

elements when possible. For example, 

when possible, break down the costs of 

the guide requirement as applied to 

each of the specific content 

requirements in paragraph (c)(1)(iv) of 

the final rule (i.e., subparagraphs (A) 

through (G) of the final rule), and as 

applied to the different types of covered 

service providers described in 

paragraph (c)(1)(iii) of the final rule. 

The Department also invites 

comments and suggestions as to 

alternative tools that would assist plan 

fiduciaries in reviewing the initial 

disclosures. Commenters are 

encouraged to state whether they 

believe these tools would be more, or 

less, beneficial to plan fiduciaries, as 

compared to the proposed guide, taking 

into account the costs and burdens to 

covered service providers, and possibly 

other parties, to prepare such tools. 

Further, the Department invites 

comments on whether the amendment 

instead should require that covered 

service providers furnish a summary of 

specified ‘‘key’’ disclosures. If so, what 

‘‘key’’ information warrants inclusion in 

a summary? How costly would it be to 

prepare a summary and who would bear 

its costs? Would these costs decrease 

significantly after an initial transition 

period and, if so, how significantly? 

Which parties, other than covered 

service providers, might be involved in 

the preparation of a summary? What 

liability and other legal issues might 

arise for covered service providers and 

others from summarizing ‘‘key’’ 

information, and how should these 

issues be managed? How would 

responsible plan fiduciaries likely use 

the summarized information and what 

effect, if any, would it have on their 

review of the underlying disclosures? 

Further, what are the likely benefits and 

costs of requiring that covered service 

providers furnish any required tool 

(whether a guide, a summary, or other 

tool) in a specified format? Is a guide or 

other tool likely to increase the 

probability that responsible plan 

fiduciaries review the initial 

disclosures, because the required 

information is easier to find? What 

formatting requirements (e.g., a chart, 

page limits), if any, lend themselves to 

presentation of the initial disclosures 

required by the rule? Finally, what 

innovations in the preparation and 

delivery of disclosures currently exist in 

the marketplace, and how might a 

formatting requirement take advantage 

of these innovations? 

D. Focus Group Testing 

Elsewhere in today’s Federal Register, 

the Department announced its intention 

to conduct approximately eight to 10 

focus group sessions with 

approximately 70 to 100 fiduciaries to 

small pension plans (those with fewer 

than 100 participants). The purpose of 

the focus group testing is to explore 

current practices and effects of EBSA’s 

final regulation. This may provide 

information about the need for a guide, 

summary, or similar tool to help 

responsible plan fiduciaries navigate 

and understand the required 

disclosures. The focus group 

participants will be asked to provide 

information including the following: (1) 

Their role with respect to their plan; (2) 

the number of service providers hired 

by the plan; (3) whether they are aware 

of and understand the disclosures 

mandated by the 408(b)(2) final 

regulation; (4) their experience with 

receiving the disclosures; (5) whether 

they were able to find information 

regarding the services that would be 

provided and the costs of those services; 

(6) whether their review of the 

disclosures impacted their decisionmaking with regard to hiring, 

monitoring, or retaining service 

providers or changing plan investment 

options; (7) whether their covered 

service providers furnish a guide or 

similar organizational tool to help find 

specific information within the 

disclosures; and (8) whether a guide to 

the required disclosures would be 

beneficial to them, and if so, how much 

they would be willing to pay to receive 

a guide. The focus group 

announcement, published pursuant to 

the Paperwork Reduction Act of 1995, 

explains the planned focus group testing 

in more detail and provides other 

relevant information, including how 

and from whom to obtain more 

information about the planned testing 

process. The results of the focus group 

testing will be made available to the 

public after the testing has been 

completed. Because this will not occur 

until after the close of the 90-day 

comment period for this proposal, the 

Department may decide to reopen the 

comment period on this proposal to 

solicit comments on such results. The 

Department decided to proceed with 

both this proposal and the focus group 

information-gathering techniques 

simultaneously, rather than 

consecutively, in order to avoid further, 

and unnecessary, delay. In making this 

decision, the Department is mindful of 

the fact that the ERISA section 408(b)(2) 

rulemaking, in general, began in 2007 4

and that the final rule was effective on 

July 1, 2012.5

E. Effective Date 

The Department proposes that the 

amendment to the final rule contained 

in this notice will be effective 12 

months after publication of a final 

amendment in the Federal Register. The 

Department invites comments on 

whether the amendment, as finalized, 

should be effective on a different date. 

F. Regulatory Impact Analysis 

1. Executive Orders 12866 and 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 


tkelley on DSK3SPTVN1PROD with PROPOSALS
13954 Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 

6Available at http://www.whitehouse.gov/omb/

circulars/a004/a-4.pdf. 

7The annualized monetized benefit and cost 

estimates are the same for the three and seven 

percent discount rates as the underlying yearly 

benefits and costs are the same for each year. 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. OMB has 

determined that this action is not 

‘‘economically significant’’ within the 

meaning of 3(f)(1) of the executive order 

because it is not likely to have an effect 

on the economy of $100 million or more 

in any one year. The proposed rule is 

significant under section 3(f)(4) of the 

Executive Order, because it raises novel 

legal or policy issues arising from the 

President’s priorities. Accordingly, the 

rule has been reviewed by OMB. 

2. The Need for Regulatory Action 

On February 3, 2012, the Department 

published a final rule in the Federal 

Register concerning disclosures that 

must be furnished before plan 

fiduciaries enter into, extend or renew 

contracts or arrangements for services to 

certain pension plans in order for such 

a contract or arrangement to be 

‘‘reasonable,’’ as required by ERISA 

section 408(b)(2). 

In seeking to promote economic 

efficiency, the final regulation allowed 

covered service providers to satisfy the 

disclosure requirements using different 

documents from various sources as long 

as the documents, collectively, 

contained the required disclosures. The 

Department recognized, however, that 

allowing the disclosure requirements to 

be satisfied through multiple documents 

could make it difficult and time 

consuming for responsible plan 

fiduciaries to find and analyze 

particular disclosures. Moreover, the 

benefits associated with providing the 

disclosures could be diluted if the 

information provided to responsible 

plan fiduciaries is obscured in long, 

highly technical documents. Therefore, 

when publishing the interim final 

regulation, the Department requested 

comments regarding whether it should 

include a summary of or guide to the 

mandated disclosure requirements. 

Specifically, the Department requested 

comments addressing the costs, benefits, 

and burdens associated with requiring a 

summary or guide and how it could 

effectively construct such a requirement 

to ensure that it is practical and useful. 

Based on comments received in 

response to its request, the Department 

concluded when it issued the final rule 

that it lacked specific suggestions or 

data on how best to structure a guide or 

similar requirement and what the real 

costs of such a requirement would be. 

The Department therefore decided not 

to include such a requirement in the 

final rule without providing separately 

for public review and comment. The 

Department stated its intent to publish 

a Notice of Proposed Rulemaking under 

which covered service providers may be 

required to furnish a guide or similar 

tool along with the rule’s initial 

disclosures. The Department believes 

that a guide will enable the responsible 

plan fiduciaries to find needed 

compensation and other information 

and will reduce the costs they otherwise 

would incur searching for such 

information when the required 

disclosures are contained in multiple or 

lengthy documents. The Department 

also believes that covered service 

providers are best positioned to provide 

the guide, when required, in a costeffective manner, because they have the 

specialized knowledge required to 

determine where the required 

disclosures are located, and they 

generally will need to locate the 

information only once for a large 

number of clients, each of whom 

otherwise would have to locate the 

information separately. Anecdotal 

evidence suggests that small plan 

fiduciaries in particular often have 

difficulty obtaining required 

information in an understandable 

format, because small plans lack the 

bargaining power and specialized 

expertise possessed by large plan 

fiduciaries. Therefore, the Department 

anticipates that requiring the covered 

service providers to furnish a guide in 

circumstances where the required 

disclosures cannot otherwise be quickly 

and easily located will especially 

benefit small plan fiduciaries. 

3. Summary of Impacts 

In accordance with OMB Circular A– 

4,6 Table 1 below depicts an accounting 

statement showing the Department’s 

assessment of the benefits and costs 

associated with this proposed regulatory 

action. 

TABLE 1—ACCOUNTING TABLE

Category Primary 

estimate 

Low 

estimate 

High 

estimate 

Year 

dollar 

Discount 

rate 

Period 

covered 

Benefits: 

Annualized Monetized ($millions/year) 7 ................... 40.3 26.9 60.4 2013 7% 2014–2023 

40.3 26.9 60.4 2013 3% 2014–2023 

Note: Quantified benefits are from time savings resulting from use of the guide. 

Costs: 

Annualized Monetized ($millions/year) ...................... 13.4 6.8 22.3 2013 7% 2014–2023 

13.4 6.8 22.3 2013 3% 2014–2023 

Note: Quantified costs are for service providers to prepare and deliver a guide. 

Transfers: Not Applicable 

4. Regulatory Alternatives 

Executive Orders 12866 and 13563 

require an economically significant 

regulation to include an assessment of 

the costs and benefits of potentially 

effective and reasonably feasible 

alternatives to a planned regulation, and 

an explanation of why the planned 

regulatory action is preferable to the 

identified potential alternatives. While 

this proposed rule is not economically 

significant, the Department, 

nevertheless, believes it would be 

helpful to identify several alternatives 

considered to enhance the proposed 

rule’s economic efficiency. The major 

alternatives are discussed below. 

Status quo: The Department 

considered, and rejected, some 

commenters’ views on the interim final 

rule that the Department should take no 

further action—i.e., that the Department 

not adopt a guide or any formatting or 


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similar requirement. These commenters 

explained that, although they 

understand the Department’s goal in 

requiring a tool such as a guide, they 

believe that a ‘‘one size fits all’’ format 

may not be feasible and that the costs 

associated with any such tool would be 

significant. For the reasons discussed at 

length earlier in this document, the 

Department continues to believe that 

furnishing a tool to assist responsible 

plan fiduciaries’ review of the 

regulation’s initial disclosures is 

essential. 

Mandate a summary: As discussed 

earlier in this preamble, commenters 

advocating for a summary stressed the 

need for medium and small plan 

fiduciaries to have a summary of the 

required disclosures to help them 

navigate through and analyze highly 

technical disclosures that are scattered 

throughout multiple documents. They 

argue that service providers could 

produce summaries more efficiently and 

at less cost than responsible plan 

fiduciaries. Other comments raised 

concerns that mandating the specific 

format of a summary would hinder 

innovation and not allow flexibility 

when dealing with the great variety of 

pension plan service arrangements. 

Some commenters raised additional 

concerns that a summary could 

unintentionally become the primary 

document upon which some fiduciaries 

would rely without thoroughly 

reviewing all of the required 

disclosures. Some commenters argued 

that the benefits of the summary would 

exceed the cost of preparing it. The 

Department believes that the costs to 

provide a summary likely would be 

higher for many service providers than 

the cost incurred to provide a guide or 

roadmap to responsible plan fiduciaries. 

For this reason, and the other reasons 

discussed earlier in this document 

including the concern that fiduciaries 

could over-rely on the summary, the 

Department viewed this option as less 

preferable than a guide requirement. 

The Department, however, specifically 

solicits comments on these issues, 

including ideas on how to overcome the 

danger that fiduciaries will rely 

exclusively on the summary, without 

appropriately considering the more 

complete disclosures from which the 

summary was derived. 

Conditional exemption: The 

Department considered mandating a 

guide, with page number requirement, 

but exempting covered service providers 

from this requirement if producing the 

guide were either impossible or 

unreasonably burdensome. Since 

publication of the final rule, some 

covered service providers have 

expressed concern to the Department 

that it would be prohibitively expensive 

and unreasonably burdensome for them 

to comply with a guide requirement, 

especially if such a requirement 

resembles the sample guide that is 

available on the Department’s Web site, 

which includes page number references. 

Some of these service providers, for 

example, argue that their service 

contracts or arrangements and 

disclosure materials are unique and 

individualized based on the needs of 

each of their plan clients, and that this 

uniqueness makes it unreasonably 

burdensome, if not practically 

impossible, in these cases to efficiently 

produce guides on a group basis. The 

Department believes, however, that the 

public record neither supports nor 

refutes this position, and the 

Department is not independently aware 

of any research or studies bearing one 

way or the other on this issue. As 

explained earlier in this document, the 

Department intends to use this proposal 

as the vehicle to solicit specific 

comments and build a robust public 

record on this issue. The Department 

generally is skeptical that a guide and 

page number requirement is 

unreasonably burdensome in light of 

advances in technology, such as data 

tagging, and the standardization of 

many service agreements and 

investment and other disclosure 

documents. Absent credible evidence to 

the contrary, the Department believes 

that economies of scale still may be 

achieved by covered services providers 

that produce guides for multiple plan 

clients. Further, a conditional 

exemption of the type under this 

alternative also suffers from a degree of 

inherent ambiguity in that covered 

service providers and others would 

need metrics and standards to define the 

circumstances when the production of a 

guide was ‘‘impossible’’ or 

‘‘unreasonably burdensome.’’ This 

alternative also would treat covered 

service providers differently in a way 

that may not be positive and beneficial 

for plans over the long run. For 

instance, the Department is concerned 

that giving an exemption to those 

covered service providers who cannot 

currently provide a guide efficiently 

would effectively reward them for their 

inefficiency. Also, such an exemption 

would undercut the policy being 

advanced by the new 408(b)(2) 

disclosures. 

After analyzing the comments, the 

Department chose to require covered 

service providers to provide fiduciaries 

with a guide to the required disclosures, 

but to allow the use of page number or 

a specific locator. The Department 

believes that the guide requirement 

strikes an appropriate balance between 

facilitating a plan fiduciary’s evaluation 

of information critical to a prudent 

decision-making process and the costs 

and burdens associated with the 

preparation of a guide. The guide will 

provide clarity and specificity, while 

avoiding the uncertainty and burdens 

inherent in constructing a summary of 

the required disclosures. In contrast, a 

summary could result in unnecessarily 

duplicative disclosures for at least some 

service providers to the extent the same 

information that is disclosed to comply 

with the initial disclosures is also 

required to be disclosed on the 

summary. Further, for some service 

providers, some information that must 

be disclosed may be highly technical 

and may not lend itself to a ‘‘simplified’’ 

summary. The Department agrees that a 

summary document may be useful to 

some fiduciaries, especially in 

comparing fees and services among 

competing service providers, but is 

concerned that a summary may 

unintentionally become the primary 

document some responsible plan 

fiduciaries would rely on, which would 

be counter to the Department’s intention 

that required disclosures be reviewed 

and understood by responsible plan 

fiduciaries. 

The Department is making available 

on its Web site (http://www.dol.gov/

ebsa/pdf/408b2sampleguide.pdf) a 

sample guide to the initial disclosures to 

facilitate public comments on this 

proposal and solicits comments on 

whether including such a model in the 

final rule would provide useful 

guidance and reduce compliance costs 

for at least some service providers. 

5. Affected Entities and Other 

Assumptions 

The Department estimates that this 

proposed rule will affect about 45,000 

defined benefit pension plans with over 

40.9 million participants and almost 

638,000 defined contribution pension 

plans with approximately 88.7 million 

participants. The overwhelming 

majority of the affected businesses 

sponsoring these plans will be small 

businesses: out of the affected pension 

plans, the Department estimates that 

approximately 35,000 are small defined 

benefit plans and 563,000 small 


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8Estimates of the number of plans and 

participants are taken from the EBSA’s 2011 

Pension Research File, http://www.dol.gov/ebsa/

publications/

form5500dataresearch.html#planbulletins. Small 

pension plans are plans with generally less than 

100 participants, as specified in the Form 5500 

instructions. 

9 In order to be a covered service provider, the 

regulation also requires that a service provider must 

reasonably expect $1,000 or more in compensation, 

direct or indirect, to be received in connection with 

the services to the plan. 29 CFR 250.408b– 

2(c)(1)(iii). 

10 In order to provide a reasonable estimate, the 

Department used Schedule C service codes where 

it believed a majority of service providers would be 

covered service providers. The following codes 

were used: service providers with reported type 

codes corresponding to contract administrator, 

recordkeeping and information management, 

consulting (pension), custodial (other than 

securities), custodial (pension), trustee (individual), 

trustee (bank, trust company, or similar financial 

institution), insurance agents and brokers, 

insurance services, trustee (discretionary), trustee 

(directed), investment advisory (participant), 

investment advisory (plan), investment 

management, real estate brokerage, securities 

brokerage, valuation (appraisals, etc.), copying and 

duplicating, participant loan processing, participant 

communications, and foreign entities. 

11While in general small plans are not required 

to file a Schedule C, some voluntarily file. Looking 

at Schedule C filings by small plans, the 

Department concluded that most small plans 

reporting data on Schedule C used the same group 

of service providers as most larger plans. 

individual account plans.8 Most of the 

defined contribution pension plans, 

approximately 506,000, are participantdirected individual account plans. 

The proposed regulation applies to 

contracts or arrangements between 

covered plans and covered service 

providers. A familiar example is a 

contract between a recordkeeper and a 

covered individual account plan under 

which the recordkeeper will make 

available a platform of designated 

investment alternatives consisting of 

mutual funds, monitor plan and 

participant and beneficiary transactions, 

and provide plan administrative 

services such as maintaining participant 

accounts, records, and statements.9 In 

order to estimate the number of covered 

service providers and the number of 

service provider-plan arrangements, the 

Department used data from Schedule C 

of the plan year 2011 Form 5500 

submissions filed with the Department. 

In general, only plans with 100 or 

more participants that have made 

payments to a service provider of at 

least $5,000 are required to file the Form 

5500 Schedule C. These plans are also 

required to report the type of services 

provided by each service provider. The 

Department counted the service 

providers most likely to provide the 

services described in paragraph 

(c)(1)(iii) of the final rule, which defines 

which service providers are ‘‘covered’’ 

by the rule.10 In total, there were nearly 

12,000 distinct covered service 

providers reported in the Form 5500 

Schedule C data. 

The Department acknowledges that 

this estimate may be imprecise. On the 

one hand, some of the service providers 

counted here may not be covered 

service providers, but the Department is 

unable to further refine this group due 

to the limitations of the Schedule C 

data. On the other hand, because small 

plans generally do not file Schedule C, 

the number of covered service providers 

will be understated if a substantial 

number of them service only small 

plans. However, the Department 

believes that most small plans use the 

same service providers as large plans; 

therefore, the estimate based on the 

Schedule C filings by large plans is 

reasonable.11

Schedule C data was also used to 

count the number of covered planservice provider arrangements. On 

average, defined benefit plans employ 

more covered service providers per plan 

than defined contribution plans, and 

large plans use more covered service 

providers per plan than small plans. In 

total, the Department estimates that 

defined benefit plans have over 136,000 

arrangements with covered service 

providers, while defined contribution 

plans have over 2 million arrangements. 

The Department does not have sufficient 

data to estimate the number of these 

arrangements that will require a guide 

because the required disclosures are 

contained in multiple or lengthy 

documents. Therefore, for purposes of 

the analysis, the Department assumes 

that all of these arrangements will 

require a guide. 

In the interim final and final rule, the 

Department assumed that 50 percent of 

disclosures would be delivered 

electronically. The Department did not 

receive any comments regarding this 

assumption; therefore, the Department 

continues to assume that about 50 

percent of disclosures between covered 

service providers and responsible plan 

fiduciaries are delivered only in 

electronic format. 

The Department lacks data on the 

number of service providers that are 

currently providing a guide or other aid 

to help responsible plan fiduciaries 

understand the disclosures provided 

and find required information. 

Therefore, the Department has estimated 

benefits and costs of the rule assuming 

that currently covered service providers 

are not providing guides or other aids to 

their disclosures. To the extent that 

some covered service providers are 

already voluntarily providing guides, 

both benefits and costs will be 

overestimated. 

Similarly, our assumption of 100 

percent compliance with the 2012 final 

rule, if incorrect, would cause our 

estimate of time savings to be too high. 

In such a case, however, this proposed 

rule could have the effect of increasing 

compliance with the 2012 final rule, 

which would yield both time costs 

(associated with review of disclosures) 

and consumer protection benefits that 

have not been quantified in this impact 

analysis. 

6. Benefits 

The final regulation allows covered 

service providers to make the required 

disclosures through multiple 

documents. However, comments on the 

interim final rule raised concerns that 

providing many voluminous documents 

to fiduciaries could overwhelm them 

and the time and effort needed to find 

the relevant information still could be 

substantial. This proposed rule 

addresses this concern by requiring the 

covered service provider to provide the 

responsible plan fiduciary with a guide 

that specifically identifies the document 

and page or other specific locator, such 

as a section, that will allow the 

responsible plan fiduciary to quickly 

and easily find the required disclosures 

if the disclosures are not contained in a 

single document, or if the document is 

in excess of [RESERVED] number of 

pages. The positive net benefit of the 

guide requirement arises from 

specialization and economies of scale. 

Covered service providers are most 

familiar with the documents containing 

the required disclosures, and will make 

similar, if not identical, disclosures to 

many different responsible plan 

fiduciaries. Therefore, the Department 

expects that covered service providers 

will be able to find the information and 

create a guide, when required, at a lower 

cost than the responsible plan fiduciary. 

Some service providers will be able to 

spread these costs across hundreds, and 

in some cases, thousands, of 

arrangements. 

The Department estimates that there 

are 2.2 million covered arrangements 

between 12,000 covered service 

providers and nearly 684,000 covered 

plans for which disclosures are required 

under the final rule. While some of 

these arrangements are simple, others 

are complex and would require much 

information to be disclosed. The 

Department is not aware of any 

information that currently exists that 

could be used to measure the time 

savings that would result from the guide 

in circumstances where a guide would 

be required. 


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12EBSA estimates of 2013 labor rates include 

wages, other benefits, and overhead based on the 

National Occupational Employment Survey (June 

2012, Bureau of Labor Statistics) and the 

Employment Cost Index (September 2012, Bureau 

of Labor Statistics). Total labor costs were estimated 

to average $126.07 per hour over the period for legal 

professionals, $67.76 for financial professionals, 

and $29.14 per hour for clerical staff. This estimate 

uses the average labor rate of a financial manager, 

$117.88, as a proxy for a plan fiduciary’s labor rate. 

13Many disclosures will stay the same over time, 

and therefore fiduciaries could experience lesser 

savings two years after implementation of the rule 

(and every year beyond) because they would 

already have gone through the upfront process of 

learning which sections of which documents 

contain the necessary disclosures. On the other 

hand, plans may put out bids for service providers, 

for example, once every three to five years, at which 

time they may review disclosures from multiple 

service providers and many assets, thereby 

experiencing abnormally high time savings if they 

have access to disclosure guides. Given these 

offsetting effects, the Department assumes that the 

estimate presented here represents a plausible 

average across years. 

In order to produce an estimate of 

possible time savings, the Department 

conducted an informal study with two 

groups of staff. One group searched for 

specified information in plan and 

investment documents using a guidelike document, while the other group 

searched for the specified information 

in the same documents using a list of 

the documents in which the information 

could be found. The result of the 

informal study was that the group that 

used the guide-like document, on 

average, saved 30 minutes compared to 

that group that used the list. While only 

a subset (a convenience sample) of the 

information required to be disclosed by 

the final rule was searched for as part 

of the informal study, the results 

provide a basis for a conservative 

estimate of possible time savings that 

would result from the guide. Using this 

time savings as a proxy for the time 

savings that would be realized by a plan 

fiduciary, a total annual time savings of 

342,000 hours would result (0.5 hours × 

684,000 fiduciaries). If the responsible 

plan fiduciary’s time were valued at 

$118 per hour, the value of the annual 

time saved would be $40.3 million.12 13

The Department notes that the 

amount of time savings is uncertain. If 

the average time savings were only 20 

minutes, the total value of the time 

saving would be $26.9 million, while 

the value of the time savings would be 

$60.4 million if the average time savings 

were 45 minutes. Time savings also will 

depend on the sophistication and 

abilities of the individual fiduciary 

reviewer. For instance, if a reviewing 

responsible plan fiduciary is 

sophisticated relative to the informal 

study’s participants, the savings to this 

fiduciary would be more toward the 

lower point of this range, and the 

reverse would be true to the extent the 

reviewing responsible plan fiduciary is 

less sophisticated. Time savings might 

be greater to the extent that responsible 

plan fiduciaries will have to review 

changes to previously disclosed 

information, plans have multiple plan 

fiduciaries that will experience the time 

savings, or plans review bids from 

multiple service providers in response 

to requests for proposal. 

An additional benefit of the guide 

requirement is that appropriate use of 

the guide will provide responsible plan 

fiduciaries with confidence that they 

have found the relevant information in 

the covered service provider’s 

disclosures to fulfill their ERISA 

fiduciary responsibility to determine 

whether a contract or arrangement is 

reasonable. This confidence will lead to 

a further reduction in the time a 

responsible plan fiduciary spends 

searching through documents to make 

certain they have not missed additional 

relevant information. While the 

Department was unable to estimate this 

portion of the time savings, it has the 

potential to be large. 

The guide document used in the 

informal study included pagination, 

because page numbers are used in most 

industry contracts and similar 

documents that contain the required 

disclosures, and the Department wanted 

to obtain an upper-bound estimate of 

the benefits that would be obtained 

through the most specific locator, a page 

number. The Department did not 

analyze the incremental benefits of 

providing pagination relative to 

providing the section or area by name or 

other identifier, because it does not have 

the necessary data on the prevalence 

and characteristics of other identifiers to 

perform a meaningful analysis. The 

Department is aware of numerous 

possible identifiers other than 

pagination, for example, by page and 

line, paragraph, section, chapter, part, 

and volume. In addition, in the case of 

electronic media, other identifiers 

include character, screen, Web page, 

link, and folder. However, unlike 

pagination, we have no information on 

the extent to which these identifiers are 

used in employee benefit contracts and 

similar documents. The Department, 

therefore, solicits comments on the 

prevalence and characteristics of 

identifiers other than pagination and 

their usefulness. The Department also 

solicits comments on whether there are 

any relevant federal or state regulatory 

or similar requirements or standards on 

effective and not misleading disclosures 

that should be considered by the 

Department. Information received will 

be used to analyze and attempt to 

quantify the incremental benefits of 

alternatives to pagination. Our premise 

is that there is a positive correlation 

between the precision of the identifier 

and the ease with which it can be 

located and the benefits realized, such 

that more precise and easily located 

identifiers will result in more time 

saved, and less precise identifiers will 

result in less time saved. For instance, 

if pagination is a more precise identifier 

than section, identification by section 

only will result in fewer benefits to plan 

fiduciaries than identification by 

pagination. Commenters are encouraged 

to be specific in identifying and 

describing the characteristics of 

identifiers. In addition, please also 

provide data, if available, on 

incremental costs of pagination relative 

to other identifiers. 

7. Costs 

As stated above, the proposed 

regulation modifies the requirements of 

the final rule by requiring covered 

service providers that provide the 

required disclosures in multiple or 

lengthy documents to provide a guide to 

the disclosures to responsible plan 

fiduciaries that will enable responsible 

plan fiduciaries to effectively review the 

disclosures made under the final 

regulation. The hour and cost burden 

associated with the guide requirement 

result from preparing and distributing 

the guide. As noted above, the 

Department estimates that 

approximately 12,000 covered service 

providers, 684,000 covered plans, and 

2.2 million arrangements with covered 

plans would be affected by this 

proposed rule. 

Covered service providers are 

responsible for locating the information 

and preparing the guide. In the initial 

year, service providers will have to 

locate the required information in the 

disclosures and create the guide. The 

Department believes that covered 

service providers will incur lower costs 

to locate this information than 

responsible plan fiduciaries, because 

they are more familiar with the required 

disclosure documents. Once the covered 

service provider locates the information 

in the documents, it can be used to 

create multiple guides. 

While the final rule covers contracts 

and arrangements, the burden of 

creating the guide will be proportional 

to the number of products and services 

included in the contracts. In order to 

estimate the total cost associated with 

the guide requirement, the Department 

must determine the number of products 

and services that will require a guide. 

The Department is uncertain regarding 

the number of products or services; 


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14 2013 Investment Company Fact Book, http://

www.icifactbook.org/, retrieved 11 September 2013. 

15The Department estimates 2013 hourly labor 

rates include wages, other benefits, and overhead 

based on data from the National Occupational 

Employment Survey (June 2012, Bureau of Labor 

Statistics) and the Employment Cost Index 

(September 2012, Bureau of Labor Statistics); the 

2012 estimated labor rates are then inflated to 2013 

labor rates. 

16The total associated hour burden is 98,300 

hours. 

17The total associated hour burden is 196,600 

hours. 

18The total associated hour burden is 327,600 

hours. 

19 2013 Investment Company Fact Book, http://

www.icifactbook.org/, retrieved 11 September 2013. 

however, the Department believes that 

the total number of products offered by 

financial services firms exceeds the total 

number of services provided by other 

service providers. In 2012, there were a 

total of 16,380 mutual funds, closed-end 

funds, exchange traded funds, and unit 

investment trusts.14 There also were 776 

financial service firms that provided 

investment management services in the 

U.S. Seventy-six percent of these firms 

were independent fund advisors and the 

rest were brokerage firms, banks and 

thrifts, insurance companies, or nonU.S. fund advisors. 

Due to the uncertainty regarding the 

number of products and services that 

would be subject to the guide 

requirement, the Department has 

created low-range, medium-range, and 

high-range estimates. The Department 

calculated these estimates by 

multiplying the number of products 

offered by financial service firms 

(16,380) by three, four and five resulting 

in a low-range estimate of 49,140 

products and services, a middle-range 

estimate of 65,520 products and 

services, and a high-range of 81,900 

products and services. 

In order to estimate the costs 

associated with the guide requirement, 

the Department also must estimate the 

time required to create a guide for each 

unique product or service. The 

Department lacks information on the 

time required by covered service 

providers to create a guide. The 

Department believes it is reasonable to 

assume that it will take a covered 

service provider no more than one-half 

hour to locate the required information 

in its own document. Once the 

information is found and the 

appropriate document, page, and (if 

applicable) section number is noted, the 

covered service provider can construct 

the guide. The Department estimates 

that the relevant information could be 

found and the guide could be 

constructed using a total of three hours 

of a financial professional or similar 

professional’s time with a labor rate of 

$67.76 per hour, including time to 

review the document for accuracy.15

The Department constructs a low-range 

estimate using two hours, a mediumrange estimate using three hours, and a 

high-range estimate using four hours. 

Based on the foregoing, the 

Department’s low-range estimate of the 

cost covered service providers would 

incur to create their guides for the 

products and services is approximately 

$6.7 million annually (3 × 16,380 

products and services × 2 hours 16 × 

$67.76), its medium-range estimate is 

$13.3 million annually (4 × 16,380 

products and services × 3 hours 17 × 

$67.76), and its high-range estimate is 

$22.2 million annually (5 × 16,380 

products and services × 4 hours 18 × 

$67.76). 

The Department also conducted a 

threshold analysis in the Uncertainty 

section, below, which demonstrates the 

reasonableness of the assumption that 

the cost of requiring covered service 

providers to create a guide is less than 

the estimated benefit of $40.3 million 

annually. 

The required disclosures, including 

the guide, can be delivered 

electronically at minimal costs, because 

material and mailing costs are not 

incurred for guides that are delivered 

electronically. Similar to the final rule, 

this regulatory impact analysis assumes 

that about 50 percent of the guides will 

be sent electronically (1.1 million 

guides representing 50 percent of the 

approximately 2.2 million contracts or 

arrangements) with minimal associated 

cost. The Department expects guides 

that are distributed on paper will be one 

to two pages in length, and that no 

additional postage will be required, 

because the guide will be included with 

the other disclosures being sent to the 

responsible plan fiduciary. If the guide 

is two pages, the associated material and 

printing cost will be $108,000 (1.1 

million guides × 2 pages × $0.05 per 

page). 

8. Uncertainty 

The Department lacks complete data 

and empirical evidence to estimate the 

cost for covered service providers to 

create the guide. However, the 

Department believes that the costs to 

produce the guide will be less than the 

benefit derived from providing it to 

responsible plan fiduciaries for several 

reasons. For example, the burden will 

be on the covered service provider to 

provide the location of the required 

disclosures. This should reduce overall 

search time, because the covered service 

provider is more familiar with the 

documents than the responsible plan 

fiduciary. In addition, economies of 

scale will further reduce the costs, since 

service providers frequently offer 

multiple products that use similar 

documents and service multiple clients 

with the same products. Therefore, a 

single or very similar guide could be 

used for many similar products and 

clients with little or no marginal cost 

impact. In addition, the Department 

expects reduced costs to result, because, 

on average, responsible plan fiduciaries 

are expected to have higher wages than 

the financial professional the 

Department anticipates will construct 

the guides. 

There are several ways covered 

service providers can develop guides. 

With respect to guides that include 

information about investment products 

(e.g., mutual funds, bank collective 

funds, or insurance products), the 

Department believes that over time, the 

market will evolve such that the issuers 

of investment products will furnish 

product-specific investment-related fee 

and expense information and other 

material needed to create a guide 

directly to covered service providers or 

to a third party electronic data base 

containing such information, because 

the issuers can prepare and disseminate 

the data in the most cost-effective 

manner. Covered service providers, 

such as recordkeepers that offer a 

platform of designated investment 

alternatives to a covered plan, will 

receive the fee and expense information 

and incorporate it into the guides they 

prepare for responsible plan fiduciaries. 

In order to estimate the total cost 

associated with the guide requirement, 

the Department must estimate the total 

number of services and products for 

which a guide must be prepared. The 

Department lacks sufficient data to 

make this estimate. However, the 

Department believes that the total 

number of products offered by financial 

services firms exceeds the total number 

of services provided by other service 

providers. In 2012, there were a total of 

16,380 mutual funds, closed-end funds, 

exchange traded funds, and unit 

investment trusts.19 There also were 776 

financial service firms that provided 

investment management services in the 

U.S. Seventy-six percent of these firms 

were independent fund advisors and the 

rest were brokerage firms, banks and 

thrifts, insurance companies, or nonU.S. fund advisors. 

In order to create a reasonable upper 

bound for the total number of products 

and services that will have to be 

disclosed in a guide, the Department 

assumes that five times the number of 


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Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 13959 

20The estimate also accounts for the situations 

when covered service providers must include 

content in the guide regarding indirect 

compensation received in connection with services 

described pursuant to paragraph (c)(1)(iv)(A) of the 

rule. 

21This number was derived by dividing the $40.3 

million mid-range estimate of the cost of the guide 

by $67.76 per hour and dividing this quotient by 

the estimated 49,140 products and services that will 

require a guide. 

products offered by financial service 

firms or 81,900 products and services 

(16,380 × 5) would require a guide. This 

estimate accounts for all products and 

services subject to the guide 

requirement, and includes 

circumstances in which the content 

necessary to create the guide is provided 

directly to a covered service provider 

who incorporates it into its own guide 

for the products and services it provides 

to the covered plan. For example, 

recordkeepers often provide a variety of 

services to plans, including maintaining 

a platform of designated investment 

alternatives, as well as administration 

and monitoring of participant and 

beneficiary transactions (e.g., 

enrollment, payroll deductions and 

contributions, offering designated 

investment alternatives, and other 

covered plan investments, loans, 

withdrawals and distributions). When a 

recordkeeper enters into a contract or 

arrangement with a covered plan to 

provide such services and the 

designated investment alternatives 

consist of mutual funds, the 

recordkeeper may receive investmentrelated fee and expense data from a 

mutual fund company, or a third-party 

electronic database, and the 

recordkeeper will incorporate this 

information into the guide for its 

contract or arrangement with the 

covered plan.20

As stated earlier, the mid-range 

estimate of the benefits to be derived 

from creating and providing the guide 

was $40.3 million. If the Department 

assumes that an individual with a labor 

rate of $67.76 per hour creates the 

guide, then the use of, on average, 7.4 

hours 21 to create the guide for each 

product or service would cause the costs 

of the proposed rule to equal its 

estimated benefits. This 7.4-hour total 

would entail finding all the required 

information, noting the page and section 

number, and entering the information 

on the guide. The Department believes 

that nearly seven hours is more than 

adequate time to perform this function 

and thus the rule’s costs are likely to be 

less than or equal to its benefits. 

The Department performed a 

sensitivity analysis by increasing the 

estimate of the total number of products. 

This estimate was obtained by 

multiplying the number of financial 

services products (16,380) by seven and 

ten and then calculating the break-even 

average number of hours associated 

with preparing a guide. As the total 

number of hours to be allocated stayed 

the same, the associated average hours 

per product were 5.3 and 3.7 hours 

respectively as the number of products 

increases. As implied by the upper 

bound of four hours for guide creation 

mentioned in the Cost section, above, 

the Department believes that 3.7 hours 

would be more than adequate, on 

average, to create a guide for a single 

product or service or to add a product 

or service to an existing guide, and thus, 

even using an extremely high 

assumption regarding the number of 

affected products per financial services 

firm, the rule’s costs are likely to be less 

than or equal to its benefits. 

The Department’s estimates assume 

that costs to create the guide would 

remain constant over time. However, the 

Department expects there will be a 

downward trend for such costs in future 

years, because covered service providers 

(i) already will have guides for most 

products and services and only would 

need to update them as appropriate, and 

(ii) already will have created a template 

for the guide and will be familiar with 

how to incorporate information 

regarding new products and services 

into the template. 

The Department welcomes public 

comments regarding its estimates of the 

benefits and costs of the proposed rule. 

The Department is particularly 

interested in information and data 

regarding the potential for time savings 

to plan fiduciaries, the number of 

products, services, contracts and 

arrangements for which a guide would 

be required, the costs required to create 

the guide (including costs incurred for 

system changes and costs related to 

placing page or section number 

references in the guide), the potential 

for economies of scale in constructing 

the guide, and current best practices in 

the pension plan service provider 

industry for providing guides or 

summaries to clients. 

9. Regulatory Flexibility Analysis 

The Regulatory Flexibility Act (5 

U.S.C. 601, et seq.) (RFA) imposes 

certain requirements with respect to 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551, et seq.) and 

which are likely to have a significant 

economic impact on a substantial 

number of small entities. Unless an 

agency determines that a proposal is not 

likely to have such an impact, section 

604 of the RFA requires that the agency 

present a regulatory flexibility analysis 

(RFA) describing the rule’s impact on 

small entities and explaining how the 

agency made its decisions with respect 

to the application of the rule to small 

entities. Small entities include small 

businesses, organizations and 

governmental jurisdictions. 

a. Need for and Objectives of the Rule 

Service providers to pension plans 

increasingly have complex 

compensation arrangements that may 

present conflicts of interest. Thus, small 

plan fiduciaries face increasing 

difficulty in carrying out their duty to 

assess whether the compensation paid 

to their service providers is reasonable. 

This proposed rule is designed to help 

both large and small plan fiduciaries 

identify and locate the information they 

need to negotiate with and select service 

providers who offer high quality 

services at reasonable rates and to 

comply with their fiduciary duties. The 

Department’s requirement for covered 

service providers to provide a guide to 

responsible plan fiduciaries will be 

especially important to small plan 

fiduciaries as they review and analyze 

the required disclosures. 

b. Affected Small Entities 

The Department has limited data on 

the number of small entities affected by 

the rule. Using the Schedule C data from 

the Form 5500 the Department estimates 

that 11,800 service providers listed on 

the Schedule C have fees reported that 

total less than $7 million. This estimate 

of the number of small entities should 

be viewed as an upper bound as these 

service providers most likely have other 

sources of revenue besides pension 

plans, and fees from the vast majority of 

small plans are also not captured in this 

estimate. These service providers 

generally consist of professional service 

enterprises that provide a wide range of 

services to plans, such as investment 

management or advisory services for 

plans or plan participants, and 

accounting, auditing, actuarial, 

appraisal, banking, consulting, 

custodial, insurance, legal, 

recordkeeping, brokerage, third party 

administration, or valuation services. 

Many of these service providers have 

special education, training, and/or 

formal credentials in fields such as 

ERISA and benefits administration, 

employee compensation, taxation, 

actuarial science, law, accounting, or 

finance. 

c. Compliance Requirements 

The classes of small service providers 

subject to the proposed rule include 


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13960 Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 

service providers who are ERISA 

fiduciaries (for example, because they 

manage plan investments or are 

fiduciaries to investment vehicles 

holding plan assets in which the 

covered plan has a direct entity 

investment), who provide services as 

registered investment advisers to plans, 

who receive indirect compensation (or 

certain compensation from related 

parties) in connection with provision of 

specified services (namely, accounting, 

auditing, actuarial, appraisal, banking, 

certain consulting, custodial, insurance, 

participant investment advisory, legal, 

recordkeeping, securities or other 

investment brokerage, third party 

administration, or valuation services) or 

who provide recordkeeping or brokerage 

services involving a platform of 

investment options for participantdirected individual account plans. 

These small covered service providers 

are required to disclose certain written 

information to responsible plan 

fiduciaries in connection with their 

service contracts or arrangements with 

covered plans. These proposed 

regulations require that covered service 

providers furnish the responsible plan 

fiduciary with a guide specifically 

identifying the document, page, and (if 

applicable) number where the required 

information is located. Such 

information includes a description of 

the services included in the 

arrangement and what direct and 

indirect compensation will be received 

in connection with the arrangement. 

Service providers whose arrangements 

include making investment products 

available to plans additionally must 

disclose specified investment-related 

information about such products. The 

required disclosures must be provided 

to the responsible plan fiduciary 

reasonably in advance of the parties 

entering into the contract or 

arrangement for covered services. 

Preparing compliant disclosures often 

will require knowledge of financial 

products and services and related 

compensation and revenue sharing 

arrangements. 

As noted earlier in the impact 

analysis, there are economies of scale in 

the creation of guides. It would follow 

that, per product or service, small 

service providers would experience a 

cost of guide creation that is higher than 

the average discussed in section F.7, 

above. 

d. Agency Steps To Minimize Negative 

Impacts 

The Department took a number of 

steps to minimize any negative impact 

of the proposed rule on small service 

providers. One of the main reasons the 

Department chose to require covered 

service providers to provide a guide to 

responsible plan fiduciaries, rather than 

a summary, was that a guide would help 

small plan fiduciaries locate important 

information disclosed in multiple, often 

long and complex documents at a lower 

compliance cost to covered service 

providers. 

The policy justification for these 

requirements includes benefits to plan 

fiduciaries, who will realize savings in 

the form of reduced search costs more 

than commensurate to the compliance 

costs shouldered by covered service 

providers. Small plan fiduciaries are 

likely to benefit most. Small covered 

service providers, while shouldering the 

cost of providing disclosure, likely will 

often pass these costs on to their plan 

clients, who, in turn, are estimated to 

reap a net benefit, on average, that will 

more than offset this shifted compliance 

cost. 

10. Paperwork Reduction Act 

As part of its continuing effort to 

reduce paperwork and respondent 

burdens, the Department of Labor 

conducts a preclearance consultation 

program to provide the general public 

and Federal agencies with an 

opportunity to comment on proposed 

and continuing collections of 

information in accordance with the 

Paperwork Reduction Act of 1995 (PRA 

95) (44 U.S.C. 3506(c)(2)(A)). This helps 

to ensure that requested data can be 

provided in the desired format, 

reporting burden (time and financial 

resources) is minimized, collection 

instruments are clearly understood, and 

the impact of collection requirements on 

respondents can be properly assessed. 

Currently, the Department is soliciting 

comments concerning the proposed 

information collection request (ICR) 

included in this proposed rule, which 

would amend OBM Control Number 

1210–0133, Contracts or Arrangements 

Under Section 408(b)(2)—Fee 

Disclosure. A copy of the ICR may be 

obtained by contacting the individual 

identified below in this notice. The 

Department has submitted a copy of the 

proposed information collection to OMB 

in accordance with 44 U.S.C. 3507(d) for 

review of its information collections. 

The Department and OMB are 

particularly interested in comments 

that: 

• Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

collection of information, including the 

validity of the methodology and 

assumptions used; 

• Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

• Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

e.g., permitting electronic submission of 

responses. 

Comments should be submitted to the 

addresses listed in the ADDRESSES

section at the beginning of this Notice 

and received by the Department on or 

before June 10, 2014. Comments also 

may be submitted to the Office of 

Management and Budget at the 

following address: Office of Information 

and Regulatory Affairs, Attn: OMB Desk 

Officer for DOL–EBSA, Office of 

Management and Budget, Room 10235, 

725 17th Street NW., Washington, DC 

20503; by Fax: 202–395–6881 (this is 

not a toll-free number); or by email: 

OIRA_submission@omb.eop.gov. OMB 

requests that comments be received 

within 30 days of publication of the 

Notice of Proposed Rulemaking to 

ensure their consideration. A copy of 

this ICR with applicable supporting 

documentation; including a description 

of the likely respondents, proposed 

frequency of response, and estimated 

total burden may be obtained free of 

charge from the RegInfo.gov Web site at 

http://www.reginfo.gov/public/do/

PRAViewICR?ref_nbr=[201208-1210- 

001] or by contacting G. Christopher 

Cosby, Office of Policy and Research, 

U.S. Department of Labor, Employee 

Benefits Security Administration, 200 

Constitution Avenue NW., Room N 

5647, Washington, DC 20210. 

Telephone (202) 219–8410; Fax: (202) 

219 4745. These are not toll free 

numbers. 

The information collection 

requirements of the proposed rule are 

contained in paragraph (c)(1)(iv)(H), 

which requires covered service 

providers to provide responsible plan 

fiduciaries with a guide specifically 

identifying the document, page number, 

and (if applicable) section number 

where the required data is located 

within multiple or complex documents. 

The Department requested comments 

regarding a guide requirement when the 

interim final regulation was published. 

Although no public comments were 

received that specifically addressed the 

paperwork burden analysis of the 

information collections at the interim 

final rule stage, the comments that were 


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Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 13961 

submitted and described earlier in this 

preamble, contained information 

relevant to the costs and administrative 

burdens attendant to this proposal. The 

Department took such public comments 

into account in connection with 

developing this proposed rule and the 

paperwork burden analysis summarized 

below. 

Annual Hour Burden 

As stated earlier in this preamble, the 

Department estimated an hour burden 

range for the guide requirement of: 

98,300 hours with an equivalent cost of 

$6.7 million annually (low-estimate), 

196,600 hours with an equivalent cost of 

$13.4 million annually (mediumestimate), and 327,600 hours with an 

equivalent cost of $22.2 million 

annually (high-estimate). The 

Department’s methodology for 

estimating the hour burden is discussed 

in detail in the Costs section of the 

Regulatory Impact Analysis, above. 

Annual Cost Burden 

As stated earlier in this preamble, the 

Department estimated that the material 

and printing cost burden associated 

with creating the guide would be 

$108,000 annually. The Department’s 

methodology for estimating the cost 

burden is discussed in detail in the 

Costs section of the Regulatory Impact 

Analysis, above. 

These paperwork burden estimates 

are summarized as follows: 

Type of Review: Revision of existing 

collection. 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Title: Reasonable Contract or 

Arrangement Under Section 408(b)(2)— 

Fee Disclosure. 

OMB Control Number: 1210–0133. 

Affected Public: Business or other forprofit; not-for-profit institutions. 

Estimated Number of Respondents: 

12,000 annually. 

Estimated Number of Responses: 2.2 

million. 

Frequency of Response: Annually; 

occasionally. 

Estimated Annual Burden Hours: 

196,600 hours annually. 

Estimated Annual Burden Cost: 

$108,000 annually. 

11. Congressional Review Act 

The proposed rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.) and, if finalized, will 

be transmitted to Congress and the 

Comptroller General for review. The 

proposed rule is not a ‘‘major rule’’ as 

that term is defined in 5 U.S.C. 804, 

because it is not likely to result in (1) 

an annual effect on the economy of $100 

million or more; (2) a major increase in 

costs or prices for consumers, 

individual industries, or Federal, State, 

or local government agencies, or 

geographic regions; or (3) significant 

adverse effects on competition, 

employment, investment, productivity, 

innovation, or on the ability of United 

States-based enterprises to compete 

with foreign-based enterprises in 

domestic and export markets. 

12. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), as well as Executive Order 

12875, the proposed rule does not 

include any Federal mandate that may 

result in expenditures by State, local, or 

tribal governments in the aggregate of 

more than $100 million, adjusted for 

inflation, or increase expenditures by 

the private sector of more than $100 

million, adjusted for inflation. 

13. Federalism Statement 

Executive Order 13132 (August 4, 

1999) outlines fundamental principles 

of federalism, and requires the 

adherence to specific criteria by Federal 

agencies in the process of their 

formulation and implementation of 

policies that have substantial direct 

effects on the States, the relationship 

between the national government and 

States, or on the distribution of power 

and responsibilities among the various 

levels of government. The proposed rule 

does not have federalism implications 

because it has no substantial direct 

effect on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. Section 

514 of ERISA provides, with certain 

exceptions specifically enumerated, that 

the provisions of Titles I and IV of 

ERISA supersede any and all laws of the 

States as they relate to any employee 

benefit plan covered under ERISA. The 

requirements implemented in the 

proposed rule do not alter the 

fundamental reporting and disclosure 

requirements of the statute with respect 

to employee benefit plans, and, as such, 

have no implications for the States or 

the relationship or distribution of power 

between the national government and 

the States. 

List of Subjects in 29 CFR Part 2550 

Employee benefit plans, Exemptions, 

Fiduciaries, Investments, Pensions, 

Prohibited transactions, Reporting and 

recordkeeping requirements, and 

Securities. 

For the reasons set forth in the 

preamble, the Department of Labor 

proposes to amend chapter XXV, 

subchapter F, part 2550 of title 29 of the 

Code of Federal Regulations as follows: 

SUBCHAPTER F—FIDUCIARY 

RESPONSIBILITY UNDER THE EMPLOYEE 

RETIREMENT INCOME SECURITY ACT OF 

1974 

PART 2550—RULES AND 

REGULATIONS FOR FIDUCIARY 

RESPONSIBILITY 

■ 1. The authority citation for part 2550 

is revised to read as follows: 

Authority: 29 U.S.C. 1135 and Secretary 

of Labor’s Order No. 1–2011, 77 FR 1088 (Jan. 

9, 2012). Sec. 2550.401c–1 also issued under 

29 U.S.C. 1101. Sec. 2550.404a–1 also issued 

under sec. 657, Pub. L. 107–16, 115 Stat. 38. 

Sections 2550.404c–1 and 2550.404c–5 also 

issued under 29 U.S.C.1104. Sec. 2550.408b– 

1 also issued under 29 U.S.C. 1108(b)(1) and 

sec. 102, Reorganization Plan No. 4 of 1978, 

5 U.S.C. App. 1. Sec. 2550.408b–19 also 

issued under sec. 611, Pub. L. 109–280, 120 

Stat. 780, 972, and sec. 102, Reorganization 

Plan No. 4 of 1978, 5 U.S.C. App. 1. Sec. 

2550.412–1 also issued under 29 U.S.C.1112. 

■ 2. Amend 2550.408b–2 by: 

■ a. Adding paragraph (c)(1)(iv)(H): 

■ b. Revising paragraph (c)(1)(v)(B)(2) to 

read as follows: 

§ 2550.408b–2 General statutory 

exemption for services or office space. 

* * * * * 

(c) * * * 

(1) * * * 

(iv) * * * 

(H) Guide to initial disclosures. 

(1) If the information that must be 

disclosed pursuant to paragraph 

(c)(1)(iv)(A) through (G) of this section 

is not contained in a single document, 

or if the document is in excess of 

[RESERVED] pages, the covered service 

provider shall furnish the responsible 

plan fiduciary with a guide specifically 

identifying the document and page or 

other sufficiently specific locator, such 

as a section, that enables the responsible 

plan fiduciary to quickly and easily find 

the following information, as applicable 

to the contract or arrangement: 

(i) The description of services to be 

provided to the covered plan, as 

required by paragraph (c)(1)(iv)(A) of 

this section; 

(ii) The statement concerning services 

to be provided as a fiduciary and/or as 

a registered investment adviser, as 

required by paragraph (c)(1)(iv)(B) of 

this section; 

(iii) The description of all direct 

compensation, as required by paragraph 

(c)(1)(iv)(C)(1) of this section; 

(iv) The description of all indirect 

compensation, as required by paragraph 

(c)(1)(iv)(C)(2) of this section; 


tkelley on DSK3SPTVN1PROD with PROPOSALS
13962 Federal Register / Vol. 79, No. 48 / Wednesday, March 12, 2014 / Proposed Rules 

(v) The description of any 

compensation that will be paid among 

related parties, as required by paragraph 

(c)(1)(iv)(C)(3) of this section; 

(vi) The description of any 

compensation for termination of the 

contract or arrangement, as required by 

paragraph (c)(1)(iv)(C)(4) of this section; 

(vii) The description of all 

compensation (and/or a reasonable 

estimate of the cost to the covered plan) 

for recordkeeping services, as required 

by paragraph (c)(1)(iv)(D) of this section; 

and 

(viii) For covered service providers 

described in paragraphs (c)(1)(iii)(A)(2) 

or (c)(1)(iii)(B) of this section, the 

description of any compensation, 

annual operating expenses, and ongoing 

expenses (or, if applicable, total annual 

operating expenses) set forth in 

paragraph (c)(1)(iv)(E)(1) and (2), as 

required by paragraphs (c)(1)(iv)(E)(1) 

and (2) and (c)(1)(iv)(F)(1) of this 

section. 

(2) The guide described in paragraph 

(c)(1)(iv)(H)(1) of this section shall 

identify a person or office, including 

contact information, that the responsible 

plan fiduciary may contact regarding the 

disclosures provided pursuant to this 

section. 

(3) The covered service provider shall 

furnish the guide described in 

paragraph (c)(1)(iv)(H)(1) of this section 

in a separate document. 

* * * * * 

(v) * * * 

(B) * * * 

(2) A covered service provider must, 

at least annually, disclose any changes 

to the information required by 

paragraph (c)(1)(iv)(E), (F), and (H) of 

this section. 

* * * * * 

Signed at Washington, DC, this 27th day of 

February, 2014. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

[FR Doc. 2014–04868 Filed 3–11–14; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF COMMERCE 

Patent and Trademark Office 

37 CFR Part 1 

[Docket No.: PTO–P–2014–0004] 

Extension of Deadline for Requesting 

To Testify at the Public Hearings on 

the Proposed Changes To Require 

Identification of Attributable Owner 

AGENCY: United States Patent and 

Trademark Office, Commerce. 

ACTION: Notice of public hearings and 

extension of period for requesting to 

testify. 

SUMMARY: The United States Patent and 

Trademark Office (Office) published a 

notice on January 24, 2014, proposing 

changes to the rules of practice to 

require that the attributable owner, 

including the ultimate parent entity, be 

identified during the pendency of a 

patent application and at specified 

times during the life of a patent, and 

seeking written comments on the 

proposed changes. This initiative is one 

of a number of executive actions issued 

by the Administration that are designed 

to ensure issuance of the highest-quality 

patents, enhance competition by 

providing the public with more 

complete information about the 

competitive environment in which 

innovators operate, improve market 

efficiency for patent rights by making 

patent ownership information more 

readily and easily available, reduce 

abusive patent litigation by helping the 

public defend itself against frivolous 

litigation, and level the playing field for 

innovators. The Office published a 

notice on February 20, 2014 indicating 

that it was conducting two public 

hearings to introduce the proposed 

changes and directly receive feedback 

from the public. The notice published 

on February 20, 2014 also extended the 

period for comment on the proposed 

rules until April 24, 2014. The Office is 

now extending the deadline for 

requesting to testify at either public 

hearing until March 12, 2014. 

DATES: Public Hearing Dates: The first 

public hearing will take place on March 

13, 2014, from 1 p.m. Eastern Daylight 

Time (EDT) until 4 p.m. EDT, in 

Alexandria, Virginia. 

The second public hearing will take 

place on March 26, 2014, from 9 a.m. 

Pacific Daylight Time (PDT) until noon 

PDT, in San Francisco, California. 

Requests To Provide Oral Testimony: 

Those wishing to provide oral testimony 

must submit a request to do so in 

writing no later than March 12, 2014. 

Members of the public who wish to 

attend solely to observe need not submit 

a request to attend. 

ADDRESSES: Public Hearings: The first 

public hearing will take place at: 

Madison Auditorium North, Concourse 

Level, United States Patent and 

Trademark Office Headquarters, 600 

Dulany Street, Alexandria, Virginia 

22314. 

The second public hearing will take 

place at: The University of California 

Hastings College of the Law, Louis B. 

Mayer Lounge, 198 McAllister Street, 

San Francisco, California 94102. 

Requests To Provide Oral Testimony: 

Requests to provide oral testimony at 

either public hearing must be sent by 

electronic mail message over the 

Internet addressed to: 

aohearingrequest@uspto.gov. 

FOR FURTHER INFORMATION CONTACT: 

James Engel, Senior Legal Advisor (571) 

272–7725), or Erin M. Harriman, Legal 

Advisor (571) 272–7747), Office of 

Patent Legal Administration, Office of 

the Deputy Commissioner for Patent 

Examination Policy. 

SUPPLEMENTARY INFORMATION: The Office 

recently published a notice of proposed 

rulemaking proposing to require the 

disclosure of ownership information 

about patents and applications and 

requesting comments about the 

voluntary reporting of licensing offers 

and commitments and making them 

available online. See Changes to Require 

Identification of Attributable Owner, 79 

FR 4105 (Jan. 24, 2014). Under the 

proposed rulemaking, the Office plans 

to collect information on the 

‘‘attributable owner’’ of a patent or 

application, which includes the 

titleholders, entities with rights to 

enforce the patent, and entities with 

effective control over anyone reported 

in the first two categories, called the 

‘‘ultimate parent entities.’’ 

The Office also published a notice 

that it was conducting two public 

hearings (the first in Alexandria, 

Virginia, and the second in San 

Francisco, California) to introduce the 

proposed changes and directly receive 

feedback from the public. See Notice of 

Public Hearings and Extension of 

Comment Period on the Proposed 

Changes to Require Identification of 

Attributable Owner, 79 FR 9677 (Feb. 

20, 2014). The notice palso extended the 

period for comment on the proposed 

rules until April 24, 2014. The Office is 

now extending the deadline for 

requesting to testify at either public 

hearing until March 12, 2014, to provide 

interested members of the public with 

additional time to request to provide 

testimony at this public hearing. 

Members of the public who wish to 

provide oral testimony at either public 

hearing must submit a timely request 

(i.e., must submit a request to provide 

oral testimony no later than March 12, 

2014). Requests to provide oral 

testimony at either public hearing must 

indicate the following information: (1) 

The name of the person desiring to 

speak; (2) the person’s contact 

information (telephone number and 

electronic mail address); (3) the 

organization(s) the person represents, if 

any; and (4) the hearing location where 

the person prefers to speak. A person 


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