WASHINGTON–The Department of Labor is asking interested parties to provide guidance on what kind of information participants in 401(k) plans should have about the fees and expenses charged by the companies that run their plans.
The DOL’s request for information, to be published Wednesday in The Federal Register, will also ask for advice on the format that should be used to provide the information to participants as well as who should provide that information. The DOL wants the comments in hand by July 24, according to The Federal Register notice.
The request for information reflects the heightened interest the agency has in improving disclosures not only to plan participants but also to plan fiduciaries and the government about the fees paid to administer 401(k) plans, according to Jan Jacobson, director, retirement policy, the American Benefits Council, Washington.
“This is consistent with the DOL’s pledge to improve information on the costs associated with 401(k) plans,” Jacobson said.
“The information is currently available, but only through various sources now, such as the prospectus for the mutual fund,” Jacobson said.
She noted that the ABC is already providing comments about fee disclosure informally to the agency.
The average plan participant is unlikely to pull information about fees from the various resources available, she noted. Although members of the industry say they support improved disclosure, they insist the requirement needs to be not only valuable to the participant but cost-effective as well.
“That’s because in many cases, the costs of administering the plan are passed through to participants,” she explained.
Amongst the supporters of enhanced disclosure is the American Council of Life Insurers, which issued a statement on the issue after a March 6 hearing convened by the House Education and Labor Committee.
In the statement, ACLI President & CEO Frank Keating said his trade group and its member companies “are committed to helping workers save for a secure retirement.”
The DOL’s plan to request input from interested parties was disclosed in early March, within hours of a hearing on the issue of 401(k) fees by the House Education and Labor Committee.
The agency also plans to expand public disclosure of fee and expense information required in Form 5500 by acting “within the new few months” on a final rule based on proposed changes published for comment last July.
Jacobson of the ABC said the DOL has indicated it hopes to publish a final rule this summer.
In its request for comment, the DOL said it wants to obtain from plan participants, sponsors and service providers guidance on what administrative and investment-related fee and expense information participants should consider; the manner in which that information should be provided to participants; and who should be responsible for providing the information.