The Department of Labor Fee Transparency Initiatives: Part 3 - Mandatory Investment and Fee and Expense Disclosures to Plan Participants

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In this Benefits Brief, we will provide a general overview of Department of Labor regulations requiring fiduciaries of defined contribution plans (like profit sharing and 401(k) plans) which permit participants to direct the investment of their account to provide detailed information about the plan’s investment options and the applicable fees and expenses to the plan’s participants.1 These regulations are the third of three Department of Labor initiatives to improve the transparency of fee and expense information in tax-deferred retirement plans.

General Overview

Briefly stated, plan administrators are required to disclose to participants2 in writing, specific information about each of the plan’s designated investment alternatives, including information about each alternative’s investment objective, principal strategy and risks, performance history, and the applicable fees and expenses as well as information about the procedures for making and changing investment elections and restrictions on participant investment authority; these disclosures must be made prior to enrollment and at least annually. The form of the disclosure is mandated to enable the comparison of the plan options among themselves and to appropriate industry benchmarks. Plan administrators must also disclose to each participant the actual amount of expenses being paid from his or her account on a quarterly basis.

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Published In: Finance & Banking Updates, Labor & Employment Updates, Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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