Under the Department of Labor’s 2012 final rule to improve transparency of fees and expenses to plan participants, investment-related information also must be provided. This category contains several subcategories of core information about each investment option under the plan, including the following.
Performance Data. Participants must be provided specific information about historical investment performance. Information about 1-, 5- and 10-year returns must be provided for investment options, such as mutual funds, that do not have fixed rates of return. For investment options that have a fixed or stated rate of return, the annual rate of return and the term of the investment must be disclosed.
Benchmark Information. For investment options that do not have a fixed rate of return, the name and returns of an appropriate broad-based securities market index over 1-, 5- and 10-year periods (matching the performance data periods) must be provided. Investment options with fixed rates of return are not subject to this requirement.
Fee and Expense Information. For investment options that do not a have a fixed rate of return, the total annual operating expenses expressed 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 the investment. For investment options that do have a fixed rate of return, any shareholder-type fees or restrictions on the participant’s ability to purchase or withdraw from the investment.
Website Address. Investment-related information includes a website address that is sufficiently specific to provide participants and beneficiaries access to specific additional information about the investment options for workers who want more or more current information.
Glossary. Investment-related information includes a general glossary of terms to assist participants and beneficiaries in understanding the plan’s investment options, or a website address that is sufficiently specific to provide access to such a glossary.
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 NTSA Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the NTSA Advisor, at [email protected]
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