Benefits

Labor Department Extends Date to Comply with 401(k) Fee Disclosure Rule

By Staff Report

Jun. 2, 2011

The Labor Department said June 1 that it will give employers with 401(k) and other participant-directed plans more time to comply with a final rule requiring disclosure of fees and expenses of the investment options offered by the plans.


While the effective date for calendar-year plans remains Jan. 1, 2012, employers will have 120 days after the effective date to make their first disclosure of fee and expense information to plan participants, the department said. Last year, the department said the information would have to be distributed within 60 days.


As a result, calendar-year plans now have until April 30, 2012, to provide the information.


Employers will welcome the extra time, experts say.


“There will be a little more time to do the first disclosure,” said Sandy Wheeler, a director with PricewaterhouseCoopers in Washington.


The new Labor Department rules are intended to improve disclosure of fees and expenses for investments in participant-directed individual account plans, such as 401(k)s. The agency estimates there are 483,000 such plans.


The centerpiece of the regulations is a requirement that plan sponsors develop and distribute to participants a comparative chart with investment-related information, including fees and expenses.


The first part of the chart will list by category the name of each investment option, such as equity or bond funds; the website for each investment option; the average annual total return during the past year, five years, 10 years and since inception; and rates of return for the comparable time periods for a benchmark index applicable for each index.


The second part of the chart will list each investment option, its total operating expenses and fees that participants are charged. Examples include annual service charges assessed if the value of investments fall under a certain dollar amount and the charges that some funds impose on amounts withdrawn before maturity.


Aside from the chart, employers also will have to disclose to participants on a quarterly basis the actual dollar amounts charged to their accounts during the preceding quarter for specified administrative expenses. The Labor Department said the first report with that information will have to be provided by May 15, 2012.  


Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.


 


Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.

About Workforce.com

blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog

Benefits

EEOC says that employers legally can offer incentives to employees to get vaccinated in almost all instances

If you’re an employer looking to get as many of your employees vaccinated as possible, you can rest eas...

ADA, CDC, COVID-19, EEOC, GINA, pandemic, vaccinated

workforce blog

Benefits

Fixing some common misconceptions about HIPAA

Ever since the CDC amended its COVID-19 guidance to say that the fully vaccinated no longer need to wea...

COVID-19, health care, HIPAA, human resources, wellness

workforce blog

Benefits

We are in the midst of a public mental health crisis; how employers can help

Do not ignore these issues or your employees who are living with them. Mental health illnesses are no d...

ADA, benefits, Coronavirus, FMLA, mental health, paid time off