401(k) plan fee disclosure requirement
I came across an article on HR Executive Online explaining that in April 2012, plan sponsors will need to reveal/explain 401(k) plan-related expenses & fees to individual participants.
Below is an excerpt. See the part about an increased workload for HR and more accountability for employers. Is this something that is widely known? Has anyone else started taking action to prepare?
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> "[B]eginning next year, new rules from the U.S. Department of Labor require 401(k) plan providers to use an easily understandable format to automatically disclose all fees for plans and investments in the plans.
When employees receive their account statements, some may be surprised or angry to learn how much money is being deducted from their accounts to pay investment-management fees. And much to their chagrin, they'll learn that they've actually been paying for the plan itself.
Though the new rules will ultimately benefit plans, they will create a new burden of accountability for employers and increase the workload of HR professionals.
As these rules supply the missing piece of the fee puzzle, employers will no longer have an excuse for failing to fulfill their duties regarding fees under the Employee Retirement Income Security Act of 1974, which effectively prohibits employers from entering into arrangements involving unreasonably high fees.
The new rules have teeth, and enforcement will be rigorous; DOL is preparing to hire thousands of new agents to conduct compliance audits. Violations can bring hurtful fines, and even if a violation is not found, merely responding to a DOL investigation or employee complaint is costly in time and money.
Should there be any substance to the complaint, an employer could be held liable for damages from lawsuits brought by employees, as ERISA requires plan fiduciaries to steadfastly put participating employees' interests ahead of their own. This role carries considerable responsibilities and risks, including significant regulatory and legal liability."