IMHO: "Know" Way

The industry's response, by and large, has been positive (a notable exception: Congressman George Miller, author and sponsor of the 401(k) Fair Disclosure for Retirement Security Act of 2007—see " Miller Fee Bill Cruises through House Committee " at ), though one got a sense that there would be a LOT of comments forthcoming on the proposal, not the least of which was timing.   After all, the DoL is soliciting comments through September 8 (so much for vacation), and says it plans to have the new rules in place by January 1.

My first thoughts on opening the proposal doubtless mirrored many of yours—"Holy cow, 103 pages!"   And then, also perhaps like many of you, I set it aside for a time when my brain could handle 103 pages of proposed government regulation (I realize some of you are still waiting for that time).   Now, as it turns out, something like two-thirds of the document is spent analyzing the costs/benefits of the proposal.   In fact, most of it is spent outlining the costs and the assumptions associated with complying with the new proposals.  

The Proposal(s)

Despite those initial concerns, the proposal itself seems relatively straightforward: It purports to require disclosure of certain plan- and investment-related information (including fees and expenses, of course) to participant-directed account participants.   It identifies three categories of annual disclosures (to be furnished on or before their eligibility date, and at least annually thereafter), and further requires a quarterly disclosure of specific dollar amounts charged to the participant's account for specified administrative expenses.    

In the case of the latter, the DoL says the information should be "sufficiently specific to inform the participants or beneficiaries of the actual charge(s) to their accounts and enable them to distinguish the administrative services from other charges and services that may be assessed against their accounts."   On the other hand, the DoL's proposal calls only for the charges to be shown in total, noting that it "does not believe that it is necessary, or particularly useful, for participants to have administrative charges broken out and listed on a service-by-service basis." (For more details on the disclosures, see " EBSA Finishes Regulatory Package with Participant Disclosure Proposal ")

The proposal's import notwithstanding, the DoL tossed in some extra "nuggets" worth mentioning.  

First, it took the "opportunity to reiterate its long held position that the relief afforded by section 404(c)….does not extend to a fiduciary's duty to prudently select and monitor designated investment managers and designated investment alternatives under the plan," and that a "fiduciary breach or an investment loss in connection with the plan's selection of a designated investment alternative is not afforded relief under section 404(c) because it is not the result of a participant's or beneficiary's exercise of control"—a comment that struck me as a shot across the bow of federal courts that have, in a number of the recent revenue-sharing cases, been a bit "generous" in their application of 404(c)'s protections.