The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration’s participant fee disclosure rule goes into effect on August 30, 2012.

The final rule (ERISAA 404(a)(5)) is intended to ensure that employees in a 401(k) type of plan are given, or have access to, the information they need to make informed decisions, including information about fees and expenses.

Participants will be able to see first-hand all the fees charged directly against their investments, annual operating expenses, and an explanation of fees or expenses for legal, accounting and record keeping services. Participants will be able to see fees charged to or deducted from their individual accounts. A fact sheet has been prepared by DOL.

The information must be furnished in a chart or similar format designed to facilitate a comparison of each investment option available under the plan. The final rule includes, as an appendix, a model comparative chart. DOL states that, when this model chart is correctly completed, it may be used by the plan administrator to satisfy the rule's requirement that a plan's investment option information be provided in a comparative format.

Plan administrators must make the first annual disclosure by August 30, 2012. Quarterly statements are also required showing the dollar amount of plan-related fees and expenses charged or deducted from individual accounts. The first quarterly statement must be furnished no later than November 14, 2012.

Author: HR Watchdog, HRCalifornia’s Employment Law Blog, © California Chamber of Commerce