The Department of Labor (DOL) is requesting public commentary on a proposed rule that would require pension plan service providers to furnish employers and other plan fiduciaries with a guide to assist them in navigating fee disclosure documents.
"The department’s recent fee disclosure rules were a good first step in bringing transparency to the 401(k) industry and disclosing potential conflicts of interest. However, some employers, particularly small businesses, may be having a hard time locating the required fee disclosures when they are embedded in lengthy or complex documents," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "Much like a roadmap, a guide can help employers locate fee information, which will help them better understand what they are being charged by financial services providers."
In 2012, the department published a final rule requiring that companies that provide certain services to employer-sponsored 401(k) plans by furnishing detailed information about their services and the compensation they will receive, including payments from third parties. The rule allows such companies to use existing contracts and other documents to provide this information to plan fiduciaries. The department has found that the fee information is often contained in lengthy contract documents, or spread out among multiple documents.
The proposal announced today would amend the 2012 rule to require that covered service providers furnish a guide if disclosures are made using multiple or lengthy documents. The guide must specifically identify the document, page or other specific locator, such as section, that enables the employer to quickly and easily find fee information.