Media Mention

Winston & Strawn employee benefits associate Dan Salemi, based in the firm's Chicago office, was quoted in PLANSPONSOR Magazine in an article titled "The Big Reveal," published in the January 2010 issue.

The article explains that the requirements for an employee benefit plan's annual report to the Internal Revenue Service and Department of Labor on the Form 5500 have significantly changed by broadening the types of service providers whose compensation must be disclosed, as well as requiring disclosure of not only direct compensation paid to those providers, but also, for the first time, providing very detailed rules on reporting of indirect compensation.

Salemi recommends that service agreements with providers should explicitly require the provider to give the sponsor the indirect compensation data that is now required for the Form 5500. "It is important that service agreements spell that out," he said. If current service agreements do not include that requirement specifically, he suggests trying to get it added.

But just gathering the data does not end the employer's responsibility. "What the DoL really wants is for plan fiduciaries to use this information.  It is not simply a matter of complying with the reporting requirements…[next] is documenting that the [plan's fiduciary] committee evaluated the information and determined that the fees are reasonable, and that they do not give rise to prohibited transactions or create conflicts of interest that could give rise to prohibited transactions."