DOL Urged to Clarify 401(k) Fee-Disclosure Relief

By Stephen Miller, CEBS Oct 23, 2013

Industry groups pressed the Department of Labor (DOL) to clarify its guidance on the deadline to disclose to employees the annual fees they pay for their 401(k) or other defined contribution plans.

Theparticipant-level fee-disclosure regulationsthat took effect in 2012 require plan administrators to “at least annually” provide plan participants and beneficiaries with detailed investment-related information about designated investment options, which includescomparative chartsalong with written materials. The regulation defines “at least annually thereafter” as at least once in any 12-month period, regardless of whether the plan operates on a calendar or fiscal year.

Plan administrators and service providers had expressed concerns about this timing requirement and its lack of correlation with other annual participant disclosures. Although the regulation allows fee disclosures to be included with other annual benefit notices, the early deadline would have required that it be sent in its own separate mailing, rather than at the end of the year during open enrollment.

In Field Assistance Bulletin 2013-02, released earlier this year, the DOL said it would consider plan administrators as having satisfied the “at least annually thereafter” requirement if they provided a comparative fee chart to employees no later than 18 months after issuing the prior annual fee disclosure.

Although the bulletin specifically mentioned the comparative chart, many retirement plan professionals believe that the intent was to provide a one-time extension for all of the regulation’s annual fee disclosures, and not just for the comparative chart. In a Sept. 18, 2013,comment letter, the ERISA Industry Committee (ERIC), the Plan Sponsor Council of America (PSCA) and the U.S. Chamber of Commerce asked the DOL to confirm that the guidance applies to all of the requirements under the fee-disclosure regulations.

“We believe the Labor Department intended in its original announcement for the relief to apply to all of the annual participant fee disclosures, but it would be very helpful if the Department clarified this,” wrote Kathryn Ricard, ERIC’s senior vice president for retirement policy. “Allowing plans to coincide these required annual disclosures with other year-end disclosure requirements is a common-sense approach that would minimize confusion and costs among plan administrators and participants.”

Safe Harbor Concerns

Additionally, the fee-disclosure regulation provides a safe harbor that plan administrators can use to satisfy the requirements of the Employee Retirement Income Security Act (ERISA) for participants who directly oversee the investments made for their accounts. ERIC, PSCA and the chamber also requested that the DOL issue guidance to confirm that plan administrators who delay the annual fee disclosures can still rely on the fiduciary safe harbor under the regulation.

Stephen Miller, CEBS, is an online editor/manager for SHRM.​


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