On May 7, 2012, the U.S. Department of Labor (DOL) issued Field Assistance Bulletin 2012-02, containing frequently asked questions (FAQs) to help plan administrators comply with new rules improving the transparency of fees and investment expenses in retirement plans.
Among the topics addressed in the FAQs are disclosures relating to revenue-sharing arrangements that benefit service providers, and brokerage windows that allow participants to select investments beyond those designated by the plan.
"This guidance will help both plan administrators and covered service providers comply with their obligations under the department's new fee-transparency rules, so that workers who make their own investment decisions in retirement plans will have the information they need to make informed investment choices," said Phyllis C. Borzi, Assistant Secretary of Labor for the Employee Benefits Security Administration. "We also are working on a second set of frequently asked questions and answers focused more narrowly on the new rules for disclosure by covered service providers," she noted.
On Oct. 20, 2010, the department published a final rule to help America's workers manage the money they have contributed to their 401(k) or similar retirement plan accounts, by requiring the disclosure of information regarding the fees and expenses associated with their plans. This participant-level disclosure rule, under section 404(a) of the Employee Retirement Income Security Act (ERISA), is intended to ensure that employees receive core investment information in a format that enables them to meaningfully compare their plan's investment options.
A second and related final rule on fee transparency requires, in part, that certain covered service providers furnish specified information to plan administrators so that they in turn can comply with their disclosure obligations to participants. This second rule, published by the department on Feb. 3, 2012, under section 408(b)(2) of ERISA, requires disclosures to employers sponsoring pension and 401(k) plans about the administrative and investment costs associated with providing such plans to their workers.
401(k) Plan Brokerage Windows Get a Reprieve, SHRM Online Benefits Discipline, August 2012
Tips on Communicating 401(k) Fees, SHRM Online Benefits Discipline, April 2012
A Checklist for Participant Fee Disclosures, SHRM Online Benefits Discipline, March 2012
DOL Final Rule Extends Deadlines for Service Provider and Participant-Level Fee Disclosures, SHRM Online Benefits Discipline, February 2012
What 'Fee Disclosure' Really Means for Plan Sponsors, SHRM Online Benefits Discipline, November 2011
Preparing for Service Provider Fee Disclosures, SHRM Online Benefits Discipline, September 2011
401(k) Fee Disclosure for the 'You Never Told Me' Employees, SHRM Online Benefits Discipline, February 2011
SHRM Online Benefits Discipline
SHRM Online Retirement Plans Resource Page