Updates
Apr-10
Disclosure of Costs to Participants
Disclosure of Costs to Participants
The Department of Labor is currently working on a regulation that will require greater disclosure of fees and expenses to participants. With that in mind, it would be a good idea for plan sponsors and providers to voluntarily begin providing additional information.
To help with that, the following is a disclosure form that was developed as a part of the settlement of a lawsuit.
As you can see, this disclosure is much more impactful and effective than what is currently being done.
EXHIBIT A
Important Facts About [Name of Plan]
This retirement [plan] is not free. [Provider] and the funds offered in the [plan] charge various fees and expenses. Many fund companies pay [Provider] in return for being offered as investment options, as well as for the recordkeeping and related services [Provider] provides. Funds are selected based on the revenue they pay to [Provider] and on [Provider’s] assessment of their quality and cost. Both [Provider] and the mutual fund companies seek to make a profit from the [plan].
Any fees that you pay as part of your retirement plan will have an impact on your savings over time. An investor in this [plan] pays [Provider] and the fund companies an average of __% of his or her account balance every year.
The table below shows the impact of the average fee on the account of an investor who saves $_______ [the rounded average annual investment] at the beginning of each year over a twenty year period, assuming that the investment portfolio (before fees) increases by 7% per year.
Year End of year balance
without fees End of year balance after
average fee
Total impact of average fees = $__________
The Department of Labor is currently working on a regulation that will require greater disclosure of fees and expenses to participants. With that in mind, it would be a good idea for plan sponsors and providers to voluntarily begin providing additional information.
To help with that, the following is a disclosure form that was developed as a part of the settlement of a lawsuit.
As you can see, this disclosure is much more impactful and effective than what is currently being done.
EXHIBIT A
Important Facts About [Name of Plan]
This retirement [plan] is not free. [Provider] and the funds offered in the [plan] charge various fees and expenses. Many fund companies pay [Provider] in return for being offered as investment options, as well as for the recordkeeping and related services [Provider] provides. Funds are selected based on the revenue they pay to [Provider] and on [Provider’s] assessment of their quality and cost. Both [Provider] and the mutual fund companies seek to make a profit from the [plan].
Any fees that you pay as part of your retirement plan will have an impact on your savings over time. An investor in this [plan] pays [Provider] and the fund companies an average of __% of his or her account balance every year.
The table below shows the impact of the average fee on the account of an investor who saves $_______ [the rounded average annual investment] at the beginning of each year over a twenty year period, assuming that the investment portfolio (before fees) increases by 7% per year.
Year End of year balance
without fees End of year balance after
average fee
Total impact of average fees = $__________
The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.
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