A vast majority (69%) of 401(K) plan providers and third party administrators feel prepared to meet the new fee disclosure requirements that go into effect Aug. 30, but even some of them have not finalized the processes to communicate with defined contribution plan sponsors and participants.
In a recent survey, 24% say they have not finalized the communication processes needed to meet the new regulations, and 5% say they still need help understanding the U.S. Department of Labor requirements.
In addition, almost 13% of respondents say have made no preparation for the questions they are likely to get from plant participants once they receive the fee notices.
The survey of almost 200 providers and sponsors, third party administrators, record keepers and others was conducted by Broadridge Financial Solutions, a technology services company focused on global capital markets.
"Fee disclosure requirements are the most important change to the 401(k) plan since its inception more than 30 years ago," says Timothy Slavin, Broadridge's senior vice president in charge of defined contribution. "Financial firms are really starting to feel the pressure to make sure they're fully compliant with the mandated 404(a)(5) regulation before it goes into effect this year."
More than half (56%) of respondents feel participants will be somewhat interested in the fee notification and 25% expect to receive a lot of questions from participants. Almost half the respondents say they could use additional support in educational materials for participants and 28% say they need help with the electronic delivery consent gathering.
Twenty nine percent said they are already looking for ways to implement electronic communication during the second year.
"The key to staying ahead of participant reaction--whether positive or negative--is preparation and education," Slavin says. "Firms need help to arm plan sponsors with detailed information to answer participants' questions, as well as have call centers geared up and prepared to respond to inquiries in a timely fashion."