The Employee Retirement Income Security Act’s (ERISA) 404(a)(5) regulation requires plan sponsors to provide fee information to participants by August 30, 2012.
Jim 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 told PLANSPONSOR.
Plan 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 suggested.
« SURVEY SAYS: What is the most funny/unusual request you’ve received?