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July 27, 2008 at 04:00 PM
The Department of Labor has released proposed regulations aimed at providing workers with a simplified comparison of investment options for 401(k) and other employee retirement plans.
The proposed rules would establish a model disclosure form that would outline the costs for a participant to take part in a benefits plan, as well as the fees and performance history of various investment options.
“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 Secretary of Labor Elaine 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.”
Speaking with reporters, Assistant Secretary for the Employee Benefits Security Administration Bradford Campbell said the department began its effort to improve disclosure in retirement plans in recent years after seeing the issue become “more and more important” with rising plan participation levels.
At their heart, he said, the proposals were designed 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 would provide what Campbell called “the concise, useful information” that would allow a plan participant to see the fees and investment return histories of any number of products, including mutual funds, bank and insurance products, on an “apples to apples” basis.
