The Department of Labor (DOL) just unveiled the final regulations regarding the 401(k) fee disclosure rules that employers will have to abide by. Here are the details.
Effective Jan. 1, 2012 employer-sponsored 401(k) plans will have to disclose fees that participants pay on investments and transactions.
The final regulations, which the DOL announced last week, will require companies to provide investors with information on administrative and investment fees charged to their accounts in their quarterly statements.
By the DOL’s estimate, the regulations will affect about 72 million 401(k) participants.
What you must do
Participants new to retirement plans must receive an explanation of investment and transaction costs upon first signing up for an account.
From then on, participants’ statements must include:
- general plan information like accounting and administrative fees
- the fees and expenses that will be charged to individual participants or deducted from their accounts when investment decisions are made
- info on how each investment option has performed in the past — as well as its fees and expenses
- a simple, plain-English glossary of investment terms
- a chart that makes it easy to compare investment options, and
- a link to a website where participants can go for more info.
In addition, any fees listed must include a dollar amount for each $1,000 invested. For example: If an investment fund has an operating expense of 1.2%, the statement must say that the fee amounts to $12 per $1,000 invested.
Info: The DOL’s fact sheet on the new requirements can be found here.
