News & Announcements
New retirement plan fee-disclosure regulations are final
February 28, 2012
To foster greater awareness of retirement plan fees, the Department of Labor has finalized the rules and dates for new fee-disclosure regulations:
- Service provider disclosure to plan fiduciaries — Revisions to 408(b)(2) regulations under ERISA require plan service providers to disclose fees, services and investment-related information to plan fiduciaries by July 1, 2012. Under the interim rules, the disclosure deadline was April 1, 2012.
- Plan administrator disclosure to plan participants — The deadlines for the participant fee disclosures under ERISA section 404(a)(5), which was finalized last year, have also been revised:
- For plan years beginning November 1, 2011, to July 1, 2012, initial disclosure of plan and investment information must be provided by August 30, 2012.
- For plan years beginning after July 1, initial disclosure must be provided no later than 60 days after the first day of the plan year.
These regulations require plan administrators to disclose the fees paid either directly or through the plan’s investments to all plan-eligible employees (whether participating or not), as well as to former employees and all beneficiaries with account balances. Previously, initial disclosure was set to begin on May 31, 2012. Disclosure must include:
- Plan information — a listing of plan investments, general information about directing investments, plan-level administrative charges and individual participant charges
- Investment information — investment results, comparisons of results to relevant benchmarks, investment fees and expenses, and a reference to a website for additional information
- Charges deducted from participant accounts — all fees actually assessed against participant accounts during the prior quarter — whether shared by all participants (such as recordkeeping fees) or specific to individual participants (such as loan fees); in a quarterly statement or a similar disclosure; and in dollars
Note that going forward, disclosures must be given on or before the date participants can first direct investments and then annually thereafter.
What will change in American Funds’ RecordkeeperDirect® program?
Because we’ve long supported fee transparency, the new regulations won’t significantly alter our approach to communicating information about fees.
Here’s how we’ll meet our requirements so that you can meet yours:
Disclosure to plan fiduciaries
We’ll provide information about plan investments as well as the fees related to the investments, recordkeeping and administration, and custodial and trust services (if applicable).
This information will be made available to plan fiduciaries we currently serve. Going forward, we’ll provide disclosure annually and when required; for example, if non-investment related fees change.
Other plan service providers affected by the disclosure rules, such as third-party administrators or broker-dealers, are responsible for communicating their own fees and services to you.