Technical Release on Schedule C Code Definitions
The DOL published a new reporting format for Schedule C retirement plan tax returns requiring significantly more disclosure of service provider fees and compensation.
David Witz1 min read249 wordsOn November 16, 2007, the Department of Labor (“DOL”) published a new reporting format for the Schedule C retirement plan tax return, effective for the 2009 plan year, which requires significantly more disclosure of service provider fees and compensation.
New Reporting Requirements
The new Schedule C disclosure requirements are intended to improve fee transparency of service providers, permit the DOL and plan sponsor the ability to monitor the compensation arrangements of service providers, understand the impact of fees on plan assets and evaluate the value of purchased services using plan assets.
These objectives are met when a plan sponsor can obtain the information they need to assess the reasonableness of compensation paid for services rendered to the plan.
Compliance Implications
The new reporting requirements are akin to Sarbanes-Oxley impositions raising significant challenges for preparers and plan sponsors alike. Failure to comply with the new filing requirements is arguably a breach of Title 18 Part I Chapter 47 of the United States Code section 1027, which addresses false statements and concealment of facts in relation to documents required by ERISA.
Fiduciary Liability
Unfortunately, the Boards, Committees, Executives and Managers of most plan sponsors are unaware that the size and strength of their service provider does little to protect them. It is usually “C” level executives who are fiduciaries and party to signing the Form 5500 under penalties of perjury.
The liabilities alone are reason to reconsider serving in a fiduciary capacity especially when personal assets are accessible to participants, plaintiffs and the DOL to satisfy monetary damages.
