Participant-Level Fee Disclosures Coming in 2012
The Department of Labor has published final regulations which require the disclosure of certain information to participants in retirement plans with participant-directed investments (such as 401(k) plans). These regulations are effective January 1, 2012 (specifically, for plan years beginning on or after November 1, 2011). In fulfilling its fiduciary duty to comply with these regulations, an Employer/Plan Sponsor may place reasonable, good-faith reliance on the information received from its investment and service providers.
The intention of these regulations is to provide more transparency and comparability for participants with respect to investment- and plan-related expenses.
Examples of required disclosures include investment performance history with benchmark comparisons and complete fee/expense information (e.g. recordkeeping, loans, distributions, QDROs, investment transfers, internal asset-based charges); as well as information to be provided upon request (e.g. prospectuses, unit values, portfolio asset listings).
The disclosures may be provided in enrollment kits, quarterly account statements, annual notices, and directly by the investment provider. In addition, it may necessary or desirable to include disclosures in the Summary Plan Description, employee handbooks, or other supplemental communications. The disclosures are required to be provided on or before the date on which the participant can first direct investments in the plan and then annually thereafter. Changes to the information must be provided at least 30 days, but no more than 90 days, in advance of the effective date of the change (with some exceptions).
During 2011, we will offer our services to assist our clients in complying with these new regulations - by gathering adequate information from the plan's investment providers, organizing it in the required formats, ensuring timely delivery to participants, keeping it updated as changes are made, and, importantly, striving for communication that is meaningful and easily understood by participants. |
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