Employers, Have You Prepared Your Retirement Plan Fee Disclosures?
By August 30, employers that sponsor 401(k) and other plans which provide for participant-directed investments must disclose retirement plan fees. This requirement is the second stage of the Department of Labor's initiative to ensure that sponsors of and participants in such plans receive more detailed information about fees charged to the plans. The first stage – DOL regulations requiring service providers to advise employers regarding fees that they charge to plans – became effective earlier this summer.
This second stage of the regulations now requires employer to adequately disclose such fees to participants. Most employers will have been led down the path toward compliance by third-party administrators. But employers that have not yet acted should understand that the compliance deadline is approaching and that failure to disclose is a fiduciary breach.
To comply with the regulations, employers must take several steps.
- First, they must ensure that they received the disclosures that their service providers should have supplied.
- Second, employers must organize that information into a format that is acceptable to the DOL. The DOL has provided a model comparative chart that employers may use as a starting point.
- Finally, although not required by the regulations, employers also should, as a part of "best practices," determine whether the data raises issues of excessive fees or other problems. It is far better to resolve such issues before they prompt additional disclosures to participants.
DOL regulations require quarterly disclosures, so employers should ensure that they receive the necessary information from service providers on a timely basis, and promptly disseminate that information to participants.
If you require assistance in complying with the fee disclosure regulations, you may contact Scott Galloway at email@example.com or (206) 447-8919.