PD08: Keeping Participants Informed - The Art of Disclosure

0, (PLANSPONSOR.com) --

Recent legislation and regulatory action is pushing plan sponsors and providers to offer increased disclosure about fees and other issues.

While the focus of late has often been on fees, plan sponsors must also be aware of other necessary disclosures for defined contribution plans that have come out of the Pension Protection Act (PPA).

Robert Higgins, Consulting Manager for Benefit Plans Plus, offered some insight as part of a panel discussion at PLANSPONSOR's recent Plan Designs Conference in Chicago.

align="center"> The Panel Audio File

Higgins said that the most significant notice requirements revolve around three forms of automatic contribution arrangements: ACAs, EACAs (eligible automatic contribution arrangements) and QUACAs (qualified ACAs).

Each of these can provide some measure of protection under the Employee Retirement Income Security Act (ERISA), but certain notification requirements concerning the plan's intended activities and various changes that might be made must also be satisfied.

For information about these notices and how to document disclosures, Higgins recommended searching online, looking into information provided by the IRS ( www.irs.gov ), or the Los Angeles law firm of Fred Reish, Reish Luftman Reicher & Cohen ( http://www.reish.com/ ), which Higgins finds especially valuable.

Higgins believes disclosure will be extensive and comprehensive, as soon as providers have organized the information he listed. Some of the information that would be disclosed include:

• the amount and description of any shareholder-type fees,
• sales load,
• sales charge,
• deferred sales charge,
• surrender charges,
• exchange and account fees,
• purchase fees and expense fees

Melanie Walker, JD, VP for the Segal Company, added that initial and annual notices should be sent to anyone who has been defaulted into a QDIA or a grandfathered stable value fund and has not moved their money.