Employee Benefit Plan Update October 19, 2012

1. Employee Benefit Plan Update October 19, 2012

2. Today’s Agenda • Required Service Provider Fee Disclosures to Fiduciaries – 408(b)(2) • Required Fee Disclosures to Participants – 404(a)(5) • Silver Lining to New Disclosure Requirements

3. Background • Since late 2010 to the present, the DOL has been making significant changes to the rules that govern plans and their participants • Publish rules for greater disclosure of service provider fees and other plan expenses • New “participant-directed” plan fee disclosures

4. What is 408(b)(2)? • ERISA §406 –Utilization of plan assets for anything other than paying benefits, constitutes a prohibited transaction • ERISA §408(b)(2) –Provides exemption from ERISA’s prohibited transaction rules if the following requirements are met: • Arrangement is reasonable • Services are necessary • Compensation is reasonable • Effective July 1, 2012

5. 408(b)(2) Disclosure Rules • A Covered Service Provider Must Disclose: • All services to be provided under the agreement • The compensation or fees to be received for each service • The manner of receipt of compensation or fees • Information about conflicts of interest

6. Consequences of Non-Compliance

7. 404(a)(5) Regulation • Summary Disclosure of plan investment-related information and of expenses charged to participant-directed accounts. • Purpose To ensure that all participants and beneficiaries have the information they need to make informed decisions about the management of their individual accounts, are aware of what expenses are charged to their accounts and why the expenses are charged to their accounts.

8. 404(a)(5) Disclosure of Fees & Expenses to Participants • The rule specifies two types of information that must be disclosed: • Plan Related Information • General plan information • Administrative expense information • Individual expense information • Investment Related Information • Performance data • Benchmark information • Fee & expense information • Internet web site address • Glossary

9. 404(a)(5) Disclosure of Fees & Expenses to Participants • Effective Dates: • Initial annual disclosure to existing and all eligibleparticipants and disclosure to new participants no later than the later of: • 60 days after the first day of plan years beginning on or after November 1, 2011, or • August 30, 2012 (for calendar year plans) • Annually thereafter • Initial quarterly disclosure is due no later than 45 days after the end of the quarter in which the initial disclosures are required to be furnished to participants (November 14, 2012 for calendar year plans)

10. 404(a)(5) Disclosure of Fees & Expenses to Participants Additional Effective Dates: • Information changes –Any change in information • Provided at least 30 days, but not more than 90 days, prior to date of change • Additional information provided upon request

11. Silver Lining to New Disclosure Requirements • Plan Fiduciaries: • Provides a compact tool to simplify monitoring service providers • Allows an “apples-to-apples” comparison of service providers and investment alternatives • Leads to more informed decisions regarding the Plan • Plan Participants: • Investment and expense information more readily available • Enables informed decisions to be made regarding their retirement

12. Questions ?