![U.S. issues 401(k) fee disclosure rule](https://www.benefitscanada.com/wp-content/uploads/sites/7/2011/01/US_News.jpg)
The U.S. Department of Labor has unveiled its final 401(k) fee disclosure rule, which requires plan providers to give more details about what employers pay for retirement plan administration and other services.
The new rule, effective July 1, 2012, requires service providers to supply information that will enable pension plan fiduciaries to determine both the reasonableness of fees paid and any conflicts of interest that may have an impact on a service provider’s performance. The rule applies to those service providers that expect to receive $1,000 or more in compensation and
- provide certain fiduciary or registered investment advisory services;
- make available plan investment options in connection with brokerage or recordkeeping services; or
- otherwise receive indirect compensation for providing certain services to a plan.
The department also announced that it intends to publish for public comment a separate proposal that would require service providers, in addition to providing the required fee and investment expense information, to furnish a guide or similar tool to assist plan fiduciaries in identifying and locating the information that must be disclosed.
“The common-sense rule that we are finalizing today will shed light on the true costs of 401(k) accounts,” said Secretary of Labor Hilda L. Solis. “This rule, and its companion participant-level fee disclosure rule, will greatly increase the level of transparency in retirement plans. When businesses that sponsor retirement plans and the workers who participate in those plans get better information on associated fees and expenses, they’ll be able to shop around and make informed decisions that will lead to cost savings and a larger nest egg at retirement.”
A fact sheet on the regulation is available on the U.S. Employee Benefits Security Administration’s website.