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Oct 15 2010
U.S. Department of Labor Issues Fee Disclosure Regulations for Participant-Directed Defined Contribution Plans
Author(s): Blitman & King LLP
Tags: Albany Law | Department of Labor | Employee Benefit Plans | Employee Benefits | Individual Employment | Lawyers | Legal Counsel | Litigation Law | New York Law | Participant directed account plans | Syracuse Lawyers
On October 14, 2010, the U.S. Department of Labor issued final regulations concerning disclosure of plan fees and costs to participants in defined contribution participant-directed account plans. The final regulations will become effective December 20, 2010 and are applicable for the first plan year beginning on or after November 1, 2011 (January 1, 2012 for calendar year plans).
Under the regulations, fiduciaries will be required to provide participants with information showing investment related fees and expenses. The disclosure regulations apply to all types of investment options offered in participant-directed individual account plans, including stable value funds, collective trusts, annuities and other investment products. Specifically, participants must be provided with the following information:
- The total operating expenses for each investment option offered as a percentage and as a dollar amount for each $1,000 invested in that option.
- A glossary of investment terms in plain English.
- Legal, accounting and recordkeeping expenses of operating a plan as well as certain brokerage charges.
- Fees assessed, such as fees or charges for processing plan loans or qualified domestic relations orders.
- The expense ratio for each investment option.
- All shareholder fees, such as load fees.
- Historical performance data related to investment choices.
- Investment benchmarks based on one-year, five-year and 10-year investment returns.
The disclosures must be made to participants on or before the day they can first make their investment decision and annually thereafter. The information must be explained in simple, plain language.
If you have any questions concerning these regulations or any other issues involving employee benefit plans, please feel free to contact us.