Plan administrators will be required to provide defined contribution participants with quarterly statements on any administrative fees and expenses deducted from their accounts, along with annual disclosures of any investment-related fees associated with plan investment options, under rules unveiled Thursday by the Department of Labor.
The rule applies to plan years beginning on or after Nov. 1, 2011.
The investment disclosures, which must be provided to participants annually, will require total annual operating expenses of investment options that do not have a fixed rate of return, “as both a percentage of assets and as a dollar amount for each $1,000 invested, and any shareholder-type fees or restrictions on the participant's ability to purchase or withdraw from an investment,” according to a DOL fact sheet on the new rule.
In addition, the investment-related information must include a glossary of terms to help participants understand the plan's investment options, the fact sheet said.
The investment-related information must be provided in a chart or similar format “designed to facilitate a comparison of each investment option under the plan.”
The quarterly statements also must include general plan information, including a list of the plan's investment options and a description of any brokerage windows, and explanations of any administrative fees deducted from the plan, such as those for record keeping, legal and accounting services.
Performance and benchmark data for each investment option also must be disclosed, the DOL fact sheet says.
Plan officials will also have to provide that “standard methodologies” be used to calculate expense and return information.
The full final rule and model chart are available on the home page of the DOL's Employee Benefits Security Administration, at http://www.dol.gov/ebsa.