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Top 10 Questions and Answers
to Help You Address Changes to Section 408(b)(2) of ERISA

Executive Summary

Changes to the ERISA rules governing service provider compensation reporting and disclosure have sparked a growing interest in the amount and the reasonableness of compensation that a 401(k) or other defined contribution plan may pay, directly or indirectly, to plan service providers, including financial professionals.

This guide provides a "Top 10 List" of questions and answers to help financial professionals:

  • Prepare for questions they may receive as a result of a DOL audit concerning the "covered service provider" role, their compensation and the reasonableness of the service arrangement
  • Clarify the different roles they play, dispel misconceptions and explain the value proposition and quality of services they bring to plan clients
  • Ensure the fees charged by their firm are effectively evaluated against those of comparable providers

The introductions of 408(b)(2) rule disclosures are an opportunity for you, as a financial professional, to take a proactive approach and reiterate the value of your services to plan clients. Being prepared means you'll spend less time working to alleviate plan fiduciary concerns and more time working with them to meet their plan goals.

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While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal or its representatives are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Principal Life is not a fiduciary in the broader context of operating any plan. The selection of any investment option on behalf of a plan is the fiduciary responsibility of the appropriate plan fiduciary, which is not Principal Life, nor any affiliate. Principal Life does not guarantee performance of any investment option (other than the portion of a group annuity contract that constitutes a guaranteed benefit policy as described in ERISA §401(b)(2)). Principal Life does not guarantee that any investment option will meet the criteria of any particular plan's investment policy statement or be suitable for use by any specific plan. The limited fiduciary tasks undertaken by Principal Life do not eliminate the responsibilities of the relevant plan fiduciaries for the prudent selection and monitoring of any investment option for a retirement plan. Please consult with your counsel or other advisor.

Principal Life Insurance Company, Des Moines, Iowa 50392-0002,

Investment options are subject to investment risk. Shares or unit values will fluctuate and investments, when redeemed, may be worth more or less than their original cost. It is possible for an investment option to lose value.

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.

© 2013 Principal Financial Services, Inc.

For Financial Professional Use Only.

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