Employee Retirement Income Security Act’s (ERISA) 404(a)(5) regulation requires
plan sponsors to provide fee information to participants by August 30, 2012.
Sampson, managing principal at Cornerstone Retirement Advisors LLC, said plan
sponsors could face strong reactions from participants if they are not informed
about 404(a)(5) and its purpose.
“If a company is not prepared for this, poor HR is about to get swamped,” he
advisers should schedule educational meetings with participants and sponsors
alike before the 404(a)(5) compliance deadline. Participants must be made aware
that the fees they see in their quarterly statements have always existed, but they
were not visible until this regulation.
The adviser should communicate that the visibility of these fees is a
positive change for participants and plan sponsors. Sampson suggested a good
way to explain the benefits of participant fee disclosure: “When is the last
time you bought something and had no idea what it cost? We do it every week in
our 401(k) plan.”
Plan advisers should also schedule a meeting with
participants to teach them how to read their quarterly statements, Sampson