The new fee disclosure regulations will take center stage early in 2012. Plan sponsors are required to know and understand the fees in their compnay sponsored retirement plan. If plan sponsors do not address this, their employees will bring it to their attention very soon.
6. All plan sponsors will have greater fiduciary liabilities – they’re now responsible for collecting and presenting – this data. The DOL has a specific suggestion for how to present this data. The DOL wants fees to be openly disclosed because it’s worried too many people believe their 401(k)is free. Many participants, and unfortunately many plan sponsors, will experience “sticker shock” when they see the fees they’ve been paying.7. All vendors will have greater liabilities – they can’t hide fees anymore. You might think this will worry those vendors, and you’re right. What you might not think, and what they might not think either, is that this disclosure should worry plan sponsors, too.
8. Performance data reporting requirements may actually mislead 401(k) investors. It’s important plan sponsors understand the limitations of the DOL’s sample Model Comparative Chart and how it might cause investors to make damaging decisions. Fortunately, plan sponsors are not required to use this sample and, instead, can rely on a better report.
Fees that do not add value to the retirement plan must be eliminated. These fees reduce returns and delay the ability to retire.
Please comment or call to discuss how this affects your company.
- The 401(k) regulatory tsunami (401kplanadvisors.com)
- Service Provider Fee Disclosures Under ERISA (401kplanadvisors.com)
- New Survey Reveals How 401k Plan Sponsors Rank 8 Hot Topics (401kplanadvisors.com)