New Rules Proposed On 401(k) Plan Fee Disclosures
March 24, 2015 by Arthur D. Postal, arthur.postal@innfeedback.com
WASHINGTON – Administrators of 401(k) and similar plans will be allowed up to 14 months to disclose investment fees and other information to plan beneficiaries. That’s according to a new rule published by the agency within the Department of Labor (DOL) that oversees such plans.
The new rule is effective June 17, although the DOL said the rule could change if comments on the issue due suggest a new policy. Comments are due by April 15.
Prior to the new rule, plan administrators were required to disclose such data exactly after the prior year’s disclosure, according to a fact sheet provided by the Employee Benefits Security Administration (EBSA).
The purpose of the new rule is to provide “some necessary flexibility” to plan administrators, the fact sheet said.
However, “the rule continues to ensure that participants and beneficiaries receive the information they need on a regular and periodic basis,” EBSA said.
Specifically, the regulation governing disclosures has been revised from saying, “at least annually thereafter” to “at least once in any 14-month period, without regard to whether the plan operates on a calendar year or fiscal year basis.”
To ensure a proper transition, during the interim period until the effective date of the direct final rule, EBSA will treat a plan administrator as satisfying the current “12-month rule” if disclosures are furnished within the new 14-month deadline.
A condition of the enforcement policy is that the plan administrator “must reasonably determine” that using the extended deadline will benefit participants and beneficiaries.
The relief under this policy is in addition to the “re-set” relief previously granted under a prior policy. It is available regardless of whether a plan used that relief, EBSA said. It replaces a prior policy established last July that provided a one-time, six-month grace period to provide the data.
This enforcement policy expires on the effective date of the direct final rule without notice or any other action by the DOL, according to EBSA.
In its fact sheet, EBSA said it oversees approximately 677,000 private pension plans, including 509,000 participant-directed individual account plans such as 401(k)-type plans.
This modifies a rule established in 2010 aimed at helping workers manage and invest the money they contribute to their 401(k)-type pension plans.
The 2010 participant-level fee disclosure regulation requires that workers are given, or have access to, the information they need to make informed plan and investment decisions. This includes information about fees and expenses, with the delivery of investment-related information in a format that enables them to compare the investment options under their pension plans.
