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ERISA Tips: Participant Plan and Investment Fee Disclosures

Editor’s Note: ERISA Tips is a feature provided with you in mind — to make the newsletter more useful to you! If you have any content for ERISA Tips or the 403(b) Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the 403(b) Advisor, at jiekel@usaretirement.org.

The following information is derived from “Reporting and Disclosure Guide for Employee Benefit Plans,” a publication of the Department of Labor’s (DOL) Employee Benefits Security Administration.

Title I of ERISA sets basic requirements for the disclosure of information; among those requirements are rules for disclosures concerning the plan and investment fees that are to be made to participants and beneficiaries with the authority to direct their own investments in individual account plans.

What: The plan administrator must furnish information about the administrative and investment costs of participation in 401(k)-type plans. This includes general information about the mechanics and structure of the plan, such as how to give investment directions, and information about the plan’s administrative costs (e.g., recordkeeping, legal) and individual charges that may be assessed to participants (for loans, QDROs, etc.). This also includes a comparative chart with information about the plan’s investment options, including investment fees and expenses, performance and benchmark data, an active Website address with supplemental investment information, and a glossary of terms to assist participants in understanding the plan’s investment options. See 29 CFR § 2550.404a-5.

This information may, in certain circumstances, be included in the plan’s summary plan description (SPD) and participants’ Periodic Pension Benefit Statements.

When: General information about the plan and potential administrative and individual costs, as well as a “comparative chart” of key information about plan investment options, must be furnished annually (at least once in any 14-month period). On at least a quarterly basis, participants must receive a statement of the dollar amount of administrative and individual fees that were charged to their accounts.