The Unicorn HRO Blog

401(k) Fee Disclosures

Posted Tuesday, March 18, 2014 by HR360

Proposed Rule Requires Guide for Employers Regarding 401(k) Fee Disclosures Posted on March 11 2014 04:50 PM By Nicole Guide to Assist Employers in Meeting Fiduciary Obligations A new proposed rule would require retirement plan service providers to furnish employers and other plan fiduciaries with a guide to assist them in navigating fee disclosure documents. Fee Disclosures The federal Employee Retirement Income Security Act (ERISA) requires retirement plan fiduciaries to act prudently and solely in the interest of the plan's participants and beneficiaries when selecting and monitoring service providers and plan investments. Because arrangements for how services are provided and how service providers are compensated have become increasingly complex, plan service providers are now required to make specific disclosures to ensure that plan fiduciaries are provided the information they need to meet their fiduciary obligations. Specifically, companies that provide certain services to employer-sponsored 401(k) plans are required to furnish detailed information about their services and the compensation they will receive, including payments from third parties. Such companies are allowed to use existing contracts and other documents to provide this information to plan fiduciaries; however, fee information is often contained in lengthy contract documents, or spread out among multiple documents. Proposed Amendment The proposed rule would amend the fee disclosure requirements to require that covered service providers furnish a guide if disclosures are made using multiple or lengthy documents. If a guide is required, the covered service provider must direct the fiduciary to the place in the disclosure documents where the fiduciary can find: The description of services to be provided; The statement concerning services to be provided as a fiduciary and/or as a registered investment adviser; The description of all direct and indirect compensation, any compensation that will be paid among related parties, compensation for termination of the contract or arrangement, as well as compensation for recordkeeping services; and The required investment disclosures for fiduciary services and recordkeeping and brokerage services, including annual operating expenses and ongoing expenses, or if applicable, total annual operating expenses. Visit our section on Retirement Plan Fee Disclosure Rules for an overview of additional required disclosures

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