New Retirement Plan Fee Disclosures

Heads-up if your company offers a 401(k) or similar retirement plan: After several delays, the U.S. Department of Labor (DOL) has finally settled on a deadline for the new participant-level fee disclosure rules to take effect. The goal is to provide more transparency about the fees and expenses certain plan participants pay. The rules, which apply to retirement plans that allow participants to direct their own investments, require an annual notice. For most plan sponsors, the deadline for sending out initial fee-disclosure notices is May 31, 2012.*

Could Be Trouble

The new disclosure notices could trigger a mix of reactions among your employees. Believe it or not, some may be surprised (and not in a good way) to learn that there are costs involved in operating a retirement plan. And many of those who aren't surprised may be unhappy when they actually see their account balances reduced.

As plan sponsor, it's best to be proactive. Give some thought to the new regulations and to how your employees may react. Here are some suggestions:

• Remind your employees that fees are standard in both the retirement plan and investment industries. It's the disclosure rules that are new, not the fees.
• If you pay some (or all) of the administrative expenses, be sure to make that known.
• If you provide matching contributions, show how the money offsets the fees participants pay.
• Explain how plan fees and expenses are reviewed by the company to ensure that they are reasonable and competitive.

Be Prepared

The new disclosure notice might prompt employees to start asking questions about how other aspects of your retirement plan are handled. By making a list of possible questions ahead of time, you can be prepared with at least some of the answers. You may even want to prepare something to send out with the new disclosure notice.

_{* For any plan with a plan year beginning between November 1, 2011, and April 1, 2012.}