The U.S. Department of Labor is getting ready to unveil proposed regulations that would affect how retirement plans explain investment options to participants.
The department wants to create a model investment option disclosure form. The form would tell participants how much participating in a retirement plan costs and briefly describe the fees and performance history of the investment options.
“Our proposal is consistent with public consensus that workers need clear and concise information, not dozens of pages of ‘legalese,’” Secretary of Labor Elaine Chao said.
Bradford Campbell, the head of the Employee Benefits Security Administration, an arm of the Labor Department, said the authors of the proposal tried to answer the question, “What is it that your 401(k) plan needs to tell you, the worker, so that you can make informed decisions?”
The model disclosure form would compare mutual funds, bank products and insurance products on an “apples to apples” basis, Campbell said.
The fee figures would represent the total amount of fees a plan participant would expect to pay, Campbell said.
The Labor Department has proposed regulations that would require vendors to give plan administrators more detailed fee information.
Plan participants also could ask for more information, Campbell said.
James Klein, president of the American Benefits Council, Washington, said the Labor Department has proposed “reasonable, straightforward regulations.”
The American Council of Life Insurers, Washington, says it agrees with the need to provide meaningful disclosure without overwhelming participants with data but is still studying the proposal.
Comments on the proposed regulations will be due Sept. 8.
EBSA hopes to put the regulations in place by Jan. 1, 2009, Campbell said.