Participant Disclosure FAQs | American Funds

Participant Disclosure FAQs

Participant Disclosure FAQs (RKD)

Q1. What information must be disclosed to participants?

A1. Information about certain plan provisions plus plan-level and individual-level fees must be disclosed. After the initial disclosure is made, participants must receive updated information at least annually and notice of changes 30 to 90 days prior to the effective date of a change requiring disclosure.

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Q2. What plan provisions must be disclosed?

A2. The following information must be disclosed:

  1. An explanation of the circumstances under which participants and beneficiaries may give investment instructions
  2. An explanation of any specified limitations on such instructions under the terms of the plan, including any restrictions on transfer to or from a designated investment alternative
  3. An identification of any designated investment alternatives offered under the plan
  4. An identification of any designated investment managers
  5. For plans offering qualifying employer securities as an option: a description of or reference to plan provisions relating to the exercise of voting, tender and similar rights appurtenant to an investment in a designated investment alternative as well as any restrictions on such rights
  6. A description of any “brokerage windows,” “self-directed brokerage accounts,” or similar plan arrangements that enable participants and beneficiaries to select investments beyond those designated by the plan

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Q3. What plan-level fees must be disclosed?

A3. Participants must be told of the gross amount of any fees and expenses for general plan administrative services (e.g. recordkeeping, compliance and plan document services, and trustee/custodial fees), which may be charged against the individual accounts of participants and beneficiaries and are not reflected in the total annual operating expenses of any designated investment alternative, as well as the basis on which such charges will be allocated (e.g. pro rata, per capita).

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Q4. What types of individual-level fees must be disclosed?

A4. Participants must be told of any fees and expenses that may be charged against the individual account of a participant or beneficiary on an individual, rather than on a plan-wide, basis (e.g. fees for processing plan loans or qualified domestic relations orders, fees for brokerage windows, commissions, sales charges, redemption fees) and which are not reflected in the total annual operating expenses of any designated investment alternative.

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Q5. What is available to help meet these requirements?

A5. We created the Participant Fee Disclosure document to help you meet your disclosure requirements. Information about your plan was pulled from your customized enrollment booklet, and is updated monthly as needed. Investment returns are updated quarterly.

Please review the document for your plan and provide participants with any information that’s required but not included (e.g. information about plan assets maintained outside our recordkeeping system).

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Q6. What if I have additional information to disclose in the Participant Fee Disclosure?

  • Certain content can be customized, as applicable, including:
  • Detailed breakdown of plan-level expenses and the amounts participant may incur throughout the year
  • Third-party fees for TPAs and fee-based advisers, including TPA fees for multiple types of transactions
  • Fees for self-directed brokerage accounts not maintained on the American Funds recordkeeping system
  • Contact information for multiple plan contacts

Contact us at 800/421-6019 for details.

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Q7. How does the disclosure information need to be distributed to participants?

A7. The disclosure document must be affirmatively provided to participants; it is not enough to simply make the document available. Disclosures may be delivered electronically (e.g. as an email with an attachment) to participants who use computers as an integral part of their employment duties or to participants who give consent to receive this disclosure electronically. For those participants who do not use computers as an integral part of their employment duties, the disclosure must be distributed via hard copy.

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Q8. Who must receive the disclosure?

A8. “Participants” who must receive the disclosure include:

  • all eligible employees (including those who choose not to make plan contributions)
  • terminated employees with account balances
  • beneficiaries with account balances
  • alternate payees with account balances

Also, newly eligible employees and new beneficiaries/alternate payees must receive the disclosure document before they are first able to direct investments in the plan.

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Q9. Where can I locate the disclosure?

A9. The disclosure document is available on this website. Click the Plan Administration tab at the top of the screen and then select Plan Information. Click the Plan Features & Fee Disclosure link located on the green bar and then Participant Fee Disclosure.

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Q10. What if any of the information in the disclosure document changes during the year?

A10. A notice must be provided to participants 30 to 90 days prior to the effective date of certain changes. We will provide you with a supplemental change notice document for this purpose and will incorporate the new information into the disclosure document for the next monthly update.

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Q11. What changes will require disclosure?

A11. The following will require disclosure to participants:

  • Changes to investment options offered in the plan (both adding or removing options)
  • Modified provisions that would require participants to pay additional fees. These include, but are not limited to, changes to loan fees, distribution fees (if applicable), and adding or removing periodic payments (the participants are charged fees when these are set up on the recordkeeping system)
  • Investment option updates such as name changes
  • Adjustments in the amount of plan-level expenses incurred by participants throughout the year

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For A share (MOP) plans only:

Q12. Does the disclosure booklet contain plan-specific applicable sales charges?

A12. For plans offering A-share MOP (maximum offering price) investment options, you’ll need to notify your participants that the sales charge may be reduced or eliminated based on the plan’s total investment in the American Funds (other than the American Funds Money Market Fund). Participants should contact American Funds at 800/421-6019 for information regarding the applicable sales charge. The dollar amount of any sales charge imposed will be reflected on the participant’s transaction confirmation statement at the time the purchase is made.

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