Issue

Providing disclosure of 401(k) plan fees to the federal government, the public, plan sponsors, and plan participants.

Position Statement

The ABA believes that plan sponsors and plan participants should receive all necessary and appropriate plan fee information to help plan sponsors fulfill their fiduciary obligations and to aid plan participants in making their investment choices. 

Explanation

Title I of the Employee Retirement Income Security Act (ERISA) establishes standards of fiduciary conduct for plan sponsors and administrators. ERISA prohibits the payment of fees to service providers unless the services are necessary, and requires that the plan pay no more than reasonable compensation for such services. 

Since the Department of Labor (DOL) has the statutory authority, and has shown significant willingness to work with various parties, the ABA supports the efforts of the DOL as it works on finalizing three fee disclosure projects. The first project relates to plan sponsor disclosures to the government and the public through a review of the Form 5500 annual report. This final regulation was issued in November 2007 and applies to plan years beginning in January 2009. 

The second project, known as the Section 408(b) disclosure rule, relates to service provider disclosures to plan fiduciaries to assist in assessing the reasonableness of provider compensation and potential conflicts of interest. This proposal was originally issued in December 2007 and is scheduled to be finalized in early 2012. 

The third project, known as the participant disclosure rule or Rule 404a-5, relates to disclosure by plans to plan participants to assist participants in making their investment decisions. This project defines the appropriate amount and type of information that should be provided to plan participants. This proposal was issued in July 2008 and was finalized in October 2010.

Contact for further information: Timothy Keehan  (202) 663-5479.