Fee Disclosure Resources

With the goal of full and clear disclosure of all fees associated with certain retirement plans, the Department of Labor (DOL) has released two sets of regulations intended to help both plan sponsors and plan participants better understand their plan fees. The plan sponsor regulations, discussed on the Sponsor tab, define what disclosures service providers, such as The Standard, must make to plan sponsors. The participant regulations, described on the Participant tab, cover the disclosures plan sponsors must make to plan participants.

Watch this short presentation that explains retirement plan fees to participants.

The regulations apply to any qualified plans that are subject to the Employee Retirement Income Security Act of 1974 (ERISA). The regulations do not apply to individual retirement accounts or individual retirement annuities (IRAs), SEP IRAs, Simple IRAs or Welfare plans. With the implementation of the regulations, plan sponsors and fiduciaries are better able to assess the services covered and informed in their plan decision making, and participants can make more informed decisions about their investments.

Please see more detailed explanation of the plan sponsor and participant disclosures:

  • The Sponsor regulations tab outlines what The Standard discloses to plan sponsors, and we are already in compliance.
  • The Participant regulations tab describes the information plan sponsors must disclose to participants. The Standard partners with your clients to ensure participants receive the required information.
  • The Preparation tab details the notices and how they are distributed:
    • One-time disclosure to plan sponsors upon plan implementation (in addition to existing fee disclosures prior to entering into a plan contract)
    • Annually to plan sponsors for distribution to participants
    • Quarterly in participant account statements

Plan Sponsor Disclosure Requirements

The Department of Labor has published final regulations that require service providers to disclose certain fees and services to plan sponsors and fiduciaries before entering into a contract. The fee and service information disclosed by service providers must clearly state the compensation to be paid to the provider(s), specify the costs associated with investment options offered and highlight any potential conflicts of interest that may exist between service providers.

The regulations are outlined here for your reference. 

The plan sponsor disclosures from service providers must:

  • Be provided in writing, but do not have to be provided in the contract 
  • Include a description of the services provided 
  • State whether services will be provided as a fiduciary, or as a registered investment advisor, if applicable 
  • Describe the compensation the service provider expects to receive (either in dollar amount or as a formula) and the manner of receipt (billed or deducted from plan accounts or investments) 
  • Describe the indirect compensation the service provider expects to receive, the payer of the indirect compensation and describe the arrangement between the payer and service provider 
  • Describe various fees associated with the investment options (may be satisfied by utilizing fund prospectuses) 
  • Describe any contract termination service charges 
  • Include a reasonable and good faith estimate of the cost to the plan of the recordkeeping services if all or part of recordkeeping services will be provided without explicit compensation (i.e., if it is a bundled arrangement) or if the compensation is offset or rebated based on other compensation received by the covered service provider 

Service providers must disclose whether they are providing recordkeeping services to the plan and the compensation attributable to such services, even if no explicit charge is identified for recordkeeping.

Other Details

  • The disclosures may be delivered electronically provided the plan sponsor can access the notice with reasonable ease 
  • Recordkeepers and brokers may distribute the information they receive from investment fund providers to meet these requirements 
  • The disclosures may be provided in multiple documents, and do not have to follow any particular format 
  • Plan sponsors may request and receive additional information 

A covered service provider must provide the disclosures to the plan sponsor within a reasonable amount of time before the contract or arrangement is entered into, extended or renewed. Subsequent material changes to the plan-related fees and expenses must be provided as soon as possible, but not more than 60 days from the date the service provider has knowledge of the change. Changes to investment-related fees and expenses must be communicated annually. There is no full annual disclosure requirement.

The Standard fully backs fee disclosure and supports this commitment by providing investment-related information to clients on a monthly basis to ensure they can see potential changes to their fees and also help inform decisions about their investment line-up.

Please see the resources under Related Information for further details about plan sponsor disclosures.

Participant Disclosure Requirements And Timing

The Department of Labor has published final regulations that require plan sponsors to disclose to plan participants and beneficiaries certain fee and investment information about their ERISA-governed retirement plans. While plan sponsors bear the responsibility for the requirements under ERISA, as a practical matter, it falls to industry recordkeepers to provide the information to their plan sponsor clients.

The Standard will guide plan sponsors through the regulation process and fully support them with the necessary information if it is stored on our recordkeeping platform. We cannot provide information on funds, investments or fees that are not on our recordkeeping system.

Which participants are covered by these regulations?

  • Any participants who are eligible to self-direct investments, even if they have no account balance because they elected not to make deferrals 
  • Terminated participants with account balances 
  • Death beneficiaries with account balances 
  • Qualified Domestic Relations Order (QDRO) alternate payees with account balances 

The regulations require that plan sponsors make certain plan and investment-related information available to participants:

  • Prior to initial investment 
  • Annually thereafter 
  • Quarterly (for deducted fees) 
  • Upon request 

Investment-related information is required to be provided in a chart or similar format designed to facilitate a comparison of each investment option available under the plan so that participants can make informed investment decisions. The Department of Labor has furnished a model comparative chart, which the plan sponsor may use to satisfy this requirement.

Other requirements include providing: a website address where participants may find specific additional information about the investment options or more current information; a general glossary of terms to assist participants in understanding the plan's investment options, or a website address that is sufficiently specific to provide access to such a glossary; and upon request by a participant, prospectuses, financial reports and statements of valuation and of assets held by an investment option.

Meeting The Regulations

The Standard prepares the initial and annual notices for plan sponsors to distribute to their participants, and we update participant statements to include the required quarterly notice. We also provide the glossary of terms, and the requisite information will be available online when you log in to access your account. The Standard makes disclosure information available to plan sponsors of all defined contribution plans that are self-directed, regardless of whether they are subject to ERISA or not.

Annual Disclosure Information

The required annual disclosures involve:

  • General plan information with regard to investment-related topics in six categories 
  • Plan-level administrative expenses such as legal, accounting and recordkeeping services 
  • Transaction-level individual expenses charged directly to participant accounts such as distribution fees, loan setup and maintenance fees, Qualified Domestic Relations Order (QDRO) review fees, etc. 
  • Investment-related information that includes:
    • Giving investment instructions 
    • Limitations on instructions 
    • Voting and other rights 
    • Designated investment alternatives 
    • Designated investment manager 
    • Self-directed brokerage account option 

Information Provided Quarterly

Quarterly statements will disclose to each participant:

  • The dollar amount of any administrative expenses charged to the participant’s account including a general description of the services related to the charge (e.g., plan-level administrative fees) 
  • The dollar amount of any individual expenses reflecting each charge assessed during the quarter and a description of the services (e.g., transaction-level loan processing fees) 

Information Provided Upon Request

Information provided upon request includes:

  • Fund prospectuses, financial reports, statements of valuation and asset lists 

Information Dissemination To Participants

No specific disclosure method is required in how the disclosure information is provided to participants.

  • Quarterly disclosures can be included in the participant’s required quarterly benefit statement. 
  • Annual disclosures will be made available to plan sponsors to distribute to their participants by a number of means, including distribution with other notices, attached to one of the quarterly benefit statements or included in a summary plan description. 
  • Electronic disclosures may be permissible for certain affected participants; however, the Department of Labor is in the process of revising the electronic media regulations. 
  • Plan administrators can rely on information provided from investment or other service provider in making the required disclosures. 

Disclosure Timing

All eligible participants must be furnished the information on or before the date on which they can first direct their investments, and again annually thereafter. If there is a change to the information, a description of such change(s) must be furnished to participants at least 30 days, but not more than 90 days, in advance of the effective date of the change(s). Additionally, each participant must receive information on the dollar amount of plan fees deducted from his account each quarter.

Effective Dates

  • Annual Notice: Annually, The Standard will send plan sponsors an email reminder to send out the annual notice 45 days before the plan's year end with instructions for accessing a copy of the notice.
    If the plan sponsor uses our notice delivery service, we deliver the annual notice before the plan's year end.
  • Quarterly Notice: The effective date for calendar year plans (Dec. 31) is now no later than Nov. 14, 2012 (45 days after the end of the quarter in which annual notice is due, i.e., 45 days after Sept. 30, the last day of the third calendar quarter). 

The rules still allow compliance based on a plan’s given plan year, so plans with later plan year beginning dates (such as July 1) have a longer period to comply.

Non-compliance

Regulations require the plan sponsor to comply with disclosure requirements. Failure to comply could result in a lawsuit for breach of fiduciary duty by the Department of Labor or participants. Currently there are no monetary penalties for failure to comply with the disclosures to participants.

Please review the resources for plan sponsors under Related Information for further details about participant disclosures.