Soon employers will know exactly what their retirement plan service providers are charging, according to the feds.
The Department of Labor (DOL) just released a final interim ruling on retirement plan fees in hopes of giving employers more info so they can make the best investment decisions possible.
A second set of regs is expected to be issued this fall and will require companies to provide similar info to their workers participating in a retirement plan.
Detailed descriptions coming your way
Under the new rules, 401(k) service providers and administrators will have to provide plan fiduciaries with the following info:
- a description of the services provided
- a detailed breakdown of the compensation paid to the service provider (fees bundled together as part of an investment product offering will now have to be broken out instead of being shown as a single line item), and
- whether that compensation will be billed or deducted from the plan’s earnings.
The regs will apply to service providers and administrators that expect to earn at least $1,000 for their investment services. They go into effect July 16, 2011.
These new regs represent the first step in making 401(k) fees and expenses completely transparent — so employers and employees have more information on which to base investment decisions, according to the DOL.
Info: Click here for a fact sheet about the new regs.
