New Disclosure Rules Shine Spotlight on 401(k) Fees
Plan Sponsor Council of America president David Wray discusses new regulations designed to help participants determine their retirement-plan costs.
The Department of Labor recently put the finishing touches on new 401(k) disclosure rules designed to offer plan participants greater transparency on investment- and management-related fees. The new rules don't go into effect until this summer, but David Wray, president of the Plan Sponsor Council of America, gave us a preview of what to expect, along with a look at other trends shaping 401(k) plans.
1. New 401(k) disclosure rules will provide plan participants with more details on how much their plans are costing them. Can you describe what new information plan participants can expect to see on their 401(k) statements? Will investors have tools for evaluating whether their plans' costs are high, low, or in the right ballpark?
Previously, fee information for both plan sponsors and participants has generally been available if the sponsor or participant sought it out. For example the prospectus describing a plan investment has always included information about the fee structure the mutual fund company charged to manage the fund. To find it, however, the sponsor or participant had to dig it out. The new disclosure rules change this by requiring a report to sponsors and participants of the fees paid out of plan assets. These plan-paid fees are required to be provided to plan sponsors in significant detail.