The Department of Labor is asking interested parties to provide it with information they think participants in 401(k) plans should have concerning the fees and expenses they will pay when investing their retirement savings.
The request for information, published April 25 in The Federal Register, will also ask for input on what format should be used to provide the information to participants and who should provide that information. The DOL wants the information in hand by July 24, according to the Federal Register notice.
The request for information reflects the heightened interest the agency has in improving the disclosures made 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 for the American Benefits Council.
“This is consistent with the DOL’s pledge to improve information on the costs associated with 401(k) plans,” Jacobson said.
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She noted that the ABC is already providing information informally to the agency, as part of plan sponsors’ support for enhanced disclosure.
“The information is currently available, but only through various sources now, such as the prospectus for the mutual fund,” Jacobson said.
Yet the average participant is unlikely to pull the information from the various resources available, and the industry supports enhanced disclosure with a caveat: Whatever the requirements are, they need to be valuable to the participant and cost-effective as well.
“That’s because, in many cases, the costs of administering the plan are passed through to participants,” she explained.