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March 18, 2015 at 09:14 AM
Providers of participant-directed individual retirement account plans like 401(k)s will have a two-month grace period to provide annual fee disclosures, the U.S. Department of Labor’s Employee Benefits Security Administration announced on Wednesday. The subject of the disclosures, however, is the same.
Under the current definition, plan administrators must provide annual fee and expense disclosures no later than exactly 12 months after a participant received the initial disclosure. EBSA, part of the Department of Labor, changed the rule to require disclosures to participants at least once every 14 months in response to comments from organizations that represent employers, plans, recordkeepers and other service providers.
Among the comments received by the department is that the current definition requires plan administrators to track the specific date a participant received his or her disclosure plan-by-plan or participant-by-participant basis. Large plans may have tens of thousands of participants, though.
Other commenters raised concerns that many sponsors and service providers try to consolidate disclosures to prevent overwhelming participants, but the current definition hindered their ability to do so.
Furthermore, some commenters argued that flexibility in fee disclosure actually benefited participants, by expediting some materials or avoiding conflicts when new investment options are being considered.
