The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has issued a final rule that will provide employers sponsoring pension and 401(k) plans with information about the administrative and investment costs associated with providing such plans to their workers. The department also announced a 3-month extension in the effective date of this rule, meaning service providers must be in compliance by July 1, 2012, for new and existing contracts or arrangements between Employee Retirement Income Security Act-covered plans and service providers.
"As President Obama has said, we're at a make or break moment for the middle class and those trying to reach it. What's at stake is the American value that hard work pays off. The common-sense rule that we are finalizing today will shed light on the true costs of 401(k) accounts and ultimately reward those working hard and saving for retirement," said Secretary of Labor Hilda L. Solis. "This rule, and its companion participant-level fee disclosure rule, will greatly increase the level of transparency in retirement plans. When businesses that sponsor retirement plans, and the workers who participate in those plans, get better information on associated fees and expenses, they'll be able to shop around and make informed decisions that will lead to cost savings and a larger nest egg at retirement."
The Treasury Department's proposal will reduce regulatory burdens and make it easier for retirees to choose to receive their benefits as a stream of income in regular payments for as long as they live. These flexible "lifetime income" options can provide greater certainty in retirement and minimize the risk of retirees outliving or underutilizing their retirement savings, according to an EBSA statement.