The Department of Labor wants your company to be clearer about all those retirement plan fees and expenses. Too bad it’s given employers 134 pages of rules on how to do it!
The feds’ newest initiative creates a mammoth new to-do list for Finance when it comes to retirement plan fee disclosure.
The goal’s a noble one: To make 401(k)s and the expenses that come with them easier for employees to understand. But companies everywhere will likely be the ones scratching their heads when it comes to how to comply.
That’s why we’ve distilled the new rules into the five key changes your company needs ASAP.
Huddle with your plan service provider soon to determine how you’re going to cover these five bases, for starters:
1. General plan information. Your organization is now expected to disclose general plan data, like a list of current investment options. And get ready to disclose administrative expense info, including an explanation of plan-wide expenses, such as accounting, legal or recordkeeping fees.
2. Employee-specific plan info. Your company will need to explain, too, any fees and expenses that may be charged to or deducted from a participant’s account based on the actions he or she takes. Two examples: fees and expenses for plan loans and for processing garnishments.
3. Quarterly disclosure statements to employees. One of the biggest mandates to come out of the final rules is a quarterly disclosure to participants on the amount of plan-related fees and expenses you deduct from accounts. And if investments don’t have a fixed rate of return:
- Present it as both a percentage and in a dollar amount for each $1,000 invested, and
- Offer current, one-year, five-year and 10-year performance figures, plus comparisons to appropriate benchmarks.
4. An online resource for employees. The new DOL rules require you to provide participants and beneficiaries access to a website with specific additional info about the investment options for participants who want more or more current info. There should also be a glossary of investment terms employees can access. (That can be a website, too).
5. A method for an apples-to-apples comparison. Crack open Excel. Your company will need to provide employees with a chart comparing their investment options. Fortunately, the DOL offers a model for you in its website.
Note: The rules are effective for plan years beginning Jan. 1, 2012. But considering how much is expected of companies to comply, there’s no time to lose.
Info: For a DOL fact sheet and sample investment chart, click.