You have to give the Department of Labor credit for its diligent, detailed description of costs associated with recently proposed regulations requiring more disclosure of target-date funds.
The total dollar expense, as required by law, is included in the proposal issued late last month, including the forecast that it would cost defined contribution plan sponsors a combined $1.79 million annually to prepare the new information and $4.1 million annually to distribute it.
However, the beauty of the DOL's presentation lies in how it arrived at the estimates. Here's one example for incorporating the extra target-date information into an existing regulation on qualified default investment alternatives. The DOL said a financial professional should handle this task in about 15 minutes. Assuming a rate of $62.81 per hour, DOL said this would cost $1.79 million, based on the preparation by 114,000 affected DC plans.
The DOL said the extra information would add two pages to QDIA notices sent by sponsors to an estimated 18.4 million participants. Figuring paper costs 5 cents a page, DOL estimated this component would cost $1.2 million.
This just-the-facts presentation on costs also carried this disclaimer: “Although the Department is unable to quantify the benefits associated with the proposed regulation, it is confident that the benefits justify their costs.”
Perhaps DOL would have made a better case if it had borrowed the tagline from the MasterCard television ads: “Priceless!”