4154 / What information must be disclosed to plan participants under the 404(a)(5) regulations?
The disclosures required under these regulations can be broken down into two over-arching categories: plan-related information and investment-related information.
Plan-related information must include disclosures describing:
(1) “General Information” consisting of information concerning the structure and mechanics of the plan;
(2) “Administrative Expenses” consisting of any fees and expenses for general plan administrative services that may be charged against all individual accounts; and
(3) “Individual Expense Information” consisting of any fees and expenses that may be charged to each individual participant’s account due to actions taken by that participant.
The plan-related information disclosures must be provided to plan participants on or before the date they are first eligible to direct their investments, and then annually thereafter. On a quarterly basis, plan participants must receive notice of the actual charges relating to these plan-related fees and expenses charged to their account in the preceding quarter.
Investment-related information must include disclosures regarding any default investment option under the plan and describing:
(1) performance data concerning historical investment performance for one, five, and 10-year returns for investment options that do not have fixed rates of return;
(2) benchmarking against an appropriate broad-based securities index over one, five, and 10 years for investment options without a fixed rate of return.
(3) fee and expense information for investments without a fixed rate of return must be expressed as both a percentage of assets and as a dollar amount for each $1,000 invested, as well as fees and restrictions on the ability to purchase or withdraw from the investments. For fixed rate of return investments, only shareholder-type fees or restrictions on the purchase or withdrawal from the investment need be disclosed;
(4) a website address where participants can access information that is sufficiently specific to provide participants with additional information about the investments; and
(5) a glossary of terms that will assist participants in understanding the plan’s investment options. Plan administrators can provide this information in the form of a website address that is sufficiently specific to provide access to such a glossary.
Investment-related return information must be furnished to participants in a chart or similar format designed to encourage a comparison of each investment option available under the plan. The information that must be disclosed pursuant to these disclosure requirements is discussed in detail in Q 4158.