Providers of 401(k) and 403(b) plans must comply with the Department of Labor’s (DOL) fee disclosure requirements. In February, the DOL issued final regulations specifying three types of disclosures:
· Disclosure of fees from investment service providers to plan sponsors
· Plan facts and investment fees from plan sponsors to plan participants
· Quarterly disclosure of fees deducted from individual accounts to participants by plan sponsors
As of April 1, 2012, service providers must begin providing fee data to employers who sponsor plans covered under ERISA. For January 1 plan years, plan sponsors should receive information by July 1.
The DOL’s intent is to create more retirement plan transparency so that employees can better understand their plans and more easily compare investment options.
For most plan sponsors, however, this presents one more communication challenge. Employees may not know they already pay investment fees. While these disclosures are now required, employers may want to consider enhancing the materials to promote the full value of their retirement plans.
Contact MSEC with questions about these new requirements.