In February, the Department of Labor published final regulations under the Employee Retirement Income Security Act that became effective July 1, which require the disclosure of fees that service providers charge to pension and 401(k) plans.

There are potential serious consequences to the employer for failure to comply, including reimbursement to the plan for the fees that are determined to be unreasonable.

Most employers will hire their existing third-party administrator to do the compliance work. The third party administrator can do the work required by the new regulations, but the employer, as the plan's fiduciary administrator, will still remain the party responsible for compliance, including insuring that the fees are "reasonable."

The regs require that information on fees be provided to the "responsible plan fiduciary," which in turn is defined as "fiduciary with authority to cause the covered plan to enter into, or extend or review, the contract or arrangement" for services.

Since it is the employer who has the authority to enter into service contracts, the employer -- not the third-party vendor -- will have the fiduciary responsibility for compliance, and the potential liability for non-compliance.

Essentially, all small and medium-sized employers will rely on and pay (or have the plan pay) an outside vendor to gather the service fee information, put it in good order, and communicate the fee information to participants.

The third party administrator may, for a fee, assist the employer in judging whether the fees and service are "reasonable."

However, it is unlikely any third party administrator would agree to assume fiduciary responsibilities in providing the information or assistance.

The bottom line is the employer, as the ultimate plan administrator, will remain responsible, in a fiduciary capacity, for oversight of all aspects of compliance with the new regulations.