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408(b)(2): The Never Ending Story, or Area of Opportunity?

For some financial professionals, changes to Section 408(b)(2) of ERISA may have seemed like a one and done effort—or even something someone else had to worry about. But, the story doesn’t end there.

The Department of Labor (DOL) has already added a question to their audit checklist asking plan sponsors for all their 408(b)(2) disclosures. This likely means we’ll be dealing with the ramifications for a long time.

So, what can financial professionals do to prepare for (and make the best of) this on-going requirement? 

Here are a few tips:

  • Document, Document, Document. Make sure your service agreement is updated and contains appropriate level of detail—and ensure the plan sponsor has a current copy.
  • Prevent versus justify. Be sure to review your compensation to ensure it is still reasonable. This is especially important if an asset-based scale is used and the assets have grown.
  • Watch for opportunities. You can offer great value if you can help plan sponsors respond to audit requests or wade through disclosures from other covered service providers.

A little preparation and regular check-ups can help turn 408(b)(2) compliance into an opportunity to open doors and show value to your clients, rather than feel like a painful story that never seems to end.

Get answers to some of the most common questions financial professionals face with regards to 408(b)(2) in a new thought capital piece on

And, watch for future posts coming soon on product, legislative and regulatory updates, including a special guest post from Stephen Saxon—Partner with Washington-based Groom Law Group, one of the preeminent employee benefits firms in the country.

So, what areas of opportunity are you seeing with regards to 408(b)(2)? Let’s chat in the comments.

Affiliation Disclosures

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.


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