Plan sponsors can fulfill their requirements by having an independent benchmark analysis done on their plan soon. This analysis will help meet their obligations and result in a better retirment plan for their company.
The new rules require plan providers to disclose fees to employees in chart format in quarterly statements. Currently, these statements show investment returns net of fees, so employees don’t know how much they’re paying plan providers or investment companiesthat supply products for their plans.Though the rules require plan providers to disclose fees in an easily understandable format, there are indications that the revised account statements may turn out to be long, confusing documents — something on the order of a prospectus. Confusion will ensue, and employees will queue up at HR to ask what it all means.
After making sure employees understand the newly required disclosures — which is, itself, a fiduciary responsibility — employers will undoubtedly be lambasted with bitter complaints from employees who were unaware of the amounts of fees being deducted from their accounts and others who simply thought their actual investment returns were lower.
Accordingly, it’s imperative that employers act now to “X-ray” their plans or engage a qualified consultant for that purpose, so they understand precisely what fees are being charged for the services being provided. This will involve reviewing reams of plan documents and confronting plan providers to ascertain fee information.
Plan sponsors are unaware of the risks they assume with their company qualified retirement plan and their broker cannot be relied on to avoid these risks. The regulators are placing much more emphasis on enforcement of the rule, including fines and employee lawsuits.
Please comment or call to discuss how you can protect your company and provide a better plan for your employees and yourself.
- A Closer Look at Fiduciary Status Under ERISA (401kplanadvisors.com)
- Stern Advice: Companies shake up 401(k)plans, cut fees (401kplanadvisors.com)
- What ‘Fee Disclosure’ Rules Really Mean for Plan Sponsors (401kplanadvisors.com)