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.
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.
Among the supporters of enhanced disclosure is the American Council of Life Insurers, which put out a statement after a March 6 hearing on the issue convened by the House Education and Labor Committee.
In the statement, ACLI President and CEO Frank Keating said the trade group and its member companies “are committed to helping workers save for a secure retirement.
“We offer an array of products and services tailored to the unique needs of employers and employees. Our top priority is to encourage Americans to save for retirement,” he added.
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 convened by the House Education and Labor Committee.
The agency also plans to expand the 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 said the agency 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, plan sponsors and plan service providers information concerning what administrative and investment-related fee and expense information participants should consider, the manner in which that information should be provided or made available to participants, and who should be responsible for providing the information.
“Responses to this request for information will be used to assist the department in determining to what extent rules should be developed or modified, or other courses of action pursued, to improve the information currently available to participants and beneficiaries relating to administrative and investment-related fees and expenses, recognizing that in many instances participants may have to bear the cost of disclosing such information,” the RFI says.