DOL Proposes New Fee Disclosure Rules for 401(k) Plans

The Department of Labor (DOL) has issued a new proposed regulation that would require the disclosure of fee and expense information to participants in participant-directed individual account plans such as 401(k) plans. If adopted in its current form, the proposed regulation would take effect in 2009.

The new fee disclosure regulation is the last installment in a three-part series of new regulations dealing with fee and expense disclosure rules for qualified retirement plans. The first two sets of regulations were:

• a final regulation requiring additional Form 5500 disclosure of compensation paid to service providers, effective for plan years beginning on or after January 1, 2009; and
• a proposed regulation requiring service providers to disclose the details of their compensation to the plan, including compensation received from third parties, which could impose liability on plan fiduciaries who fail to obtain the required disclosures.

The latest proposed regulation establishes uniform fiduciary disclosure requirements for all participant-directed individual account plans, which must be provided on or before the date the participant becomes eligible to participate in the plan and thereafter on a periodic, ongoing basis. The information required falls into two categories: plan-related information and investment-related information.