Fall 2011 issue of Horizons

Examples include: • fee and expense reimbursement payments, • management fees paid to investment fund advisors, • sub-transfer agency fees, • shareholder servicing fees, • account maintenance fees, or • 12b-1 fees (these are fees for services related to marketing and distribution) Who Are Covered Service Providers? Covered service providers are required to provide written disclosures if they reasonably expect to receive more than $1,000 of compensation during the term of the contract. Covered service providers do NOT have to disclose fees that they receive which are paid directly from the plan sponsor. There are three types of covered service providers under the regulations: 1. A fiduciary under the Employee Retirement Income Security Act of 1974, which includes any party who: • Exercises discretionary authority and control over the management of the plan or the assets, • Is a registered investment advisor and provides investment advice for a fee, • Exercises discretionary authority and control over the administration of the plan, or • Is a fiduciary to a plan asset vehicle such as an investment contract, product or entity that holds plan assets. This would include plan assets invested in a common or collective trust fund maintained by a bank or a pooled separate account maintained by an insurance company. 2. Platform record keeper or an entity providing brokerage services to a participant-directed individual account plan in connection with the investment options made available under the plan. Basically the recordkeeper is providing an investment platform for the participants to invest their assets.

3. Any party who provides services to the plan and receives indirect compensation under a contract or arrangement from one of the following services:

• Accounting • Auditing • Actuarial • Banking • Consulting

• Legal • Recordkeeping • Securities or other investment brokerage • Third party administration • Valuation services

• Custodial • Insurance • Investment advisory

What Must Be Disclosed? The regulations generally require the covered service provider to disclose the following key elements: 1. Description of the services provided to the plan, 2. Identification of the party as a covered service provider, affiliate of the service provider or a subcontractor, 3. Description of the compensation and fees in connection with the services being provided, 4. Description of the recordkeeping services,

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