The Department of Labor on Tuesday unveiled proposed regulations on fee disclosure to plan participants. As part of the proposal, plan fiduciaries are required to provide investment-related information in a comparative chart or similar format.

Plan fiduciaries are required to disclose information on investment options, such as fee and expense information, past performance data, comparable benchmark returns and a Web site address.

"Our proposal is consistent with public consensus that workers need clear and concise information, not dozens of pages of 'legalese,' about the investment options available under their plans," Secretary of Labor Elaine Chao said.

Plan fiduciaries are also required to provide a description of fees and expenses charged to participants and beneficiaries for plan administrative services.

The DoL estimates that the proposal would yield net benefits of $6.1 billion to participants and beneficiaries over the next 10 years.

The proposal will be published in the Federal Register Wednesday and a 45-day comment period will follow. When finalized, it would be effective for plan years beginning on or after January 1, 2009.

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Press Release

Washington – The U.S. Department of Labor today announced a proposed rule that will make it easier for an estimated 65 million participants covered by 401(k)-type plans to make informed retirement savings decisions. The proposal would provide workers with useful summary information, including fee and expense information, for investment options available under their plans.

“Our proposal is consistent with public consensus that workers need clear and concise information, not dozens of pages of ‘legalese,’ about the investment options available under their plans, and that they would benefit greatly from having that information in a comparative format,” said U.S. Secretary of Labor Elaine L. Chao. “One of the department’s top priorities is improved disclosure to workers that will give them the information they need to make informed investment decisions.”

The centerpiece of the proposed regulation is a requirement to provide investment-related information in a comparative chart or similar format. As part of the proposal, the department has developed a model chart for complying with this requirement, while giving plan fiduciaries the flexibility to design their own charts or comparative formats. The proposal would also require plan fiduciaries to disclose basic information about the plan and its investment options, such as what options are available under the plan, how to give investment instructions, investment returns and fees and expenses, and how to obtain more detailed information. This information would be given to participants on a regular and periodic basis.

In addition, the department is proposing conforming changes to its regulation under section 404(c) of the Employee Retirement Income Security Act.

“We want to help workers make the most of their 401(k)-type plans by ensuring that they are provided the information they need to make wise investment decisions,” said Bradford P. Campbell, assistant secretary for the Labor Department’s Employee Benefits Security Administration.

0When finalized, the proposed regulation would be effective for plan years beginning on or after January 1, 2009. Comments on the proposed regulation should be directed to the U.S. Department of Labor, Employee Benefits Security Administration, Room N-5655, 200 Constitution Ave. N.W., Washington, D.C. 20210, Attention: Participant Fee Disclosure Project; electronically to e-ORI@dol.gov or via www.regulations.gov. The proposal is scheduled to be published in the July 23, 2008 edition of the Federal Register.  

Edited by: Armie Margaret Lee


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