U.S. Department of Labor regulations that will require more information to be conveyed to employers and employees about 401(k) and other employer sponsored benefit plans are now set to go into effect July 1.
The new rules, which are designed to promote more transparency and let participants compare fees more easily so they now what they are getting for their fees, were previously set to start April 1.
Many financial firms that provide 401(k) and other employer sponsored retirement plans have been gearing up to put the new reporting requirements into place. Advisors who deal with retirement plans seem to feel the new requirements will be good for participants and plan sponsors, even though small business owners will find it to be more work in the beginning.
"Employers will be given more detailed and more easily understood information about what they are getting for their fees," said David Wary, president of the Plan Sponsor Council of America, an industry group for retirement plan sponsors. "The employers are the fiduciary and it will be advantageous in the review process to have this kind of disclosure to know that they are providing the best plans possible."
The new rules will require more regular written reporting and disclosure of fees connected with 401(k) plans as well as 408(b)(2) and other employer sponsored plans.
Roland/Criss, a fiduciary services firm for investment managers, has published a white paper on the issue and other companies are ramping up their efforts to get the word out on the new requirements.
For instance, Vanguard has recommended investment options be grouped into tiers so participants can more easily compare such things as target date funds with other funds. Likewise, Broadridge Financial Solutions in Lake Success, N.Y., a technology service company, is helping firms navigate the new fee disclosure regulations.
-Karen DeMasters