Understanding the New 403(b) Model Disclosure Form

February 14, 2012 (PLANSPONSOR.com) – One of the key reasons for the 403(b) Transparency Taskforce’s new 403(b) model disclosure form is so vendors can show plan sponsors that they offer more than just products, according to industry experts.

Robert J. Toth, Jr., Esq., Law Office of Robert J. Toth, Jr., told attendees of the National Tax Sheltered Accounts Association’s (NTSAA) 403(b) Advisor Summit plan sponsors will see the services vendors offer on the form. The U.S. Department of Labor (DoL) is requiring vendors to provide fee disclosure to sponsors of Employee Retirement Income Security Act (ERISA)-governed 403(b) plans (see DoL Issues Final Rule on Fee Disclosure); the Taskforce’s Model Disclosure Form is for sponsors of non-ERISA plans.  

Debra A. Davis, ASPPA, said the form is just a suggestion for non-ERISA plans. The Taskforce used the DoL’s disclosure rules to establish what should be disclosed by non-ERISA plans.  

According to Davis, states and school districts are reconsidering their retirement plan offerings. Some are considering a state-wide 403(b) plan, which will result in vendor consolidation. In addition, consultants are telling states to lower fees. Davis said the Model Disclosure Form shows lawmakers that states don’t have to move to a lower fee model; instead, they can inform participants and let them choose.  

If legislators required disclosures to non-ERISA plans, that would give authority to the Internal Revenue Service (IRS), which would look to the DoL regulations for ERISA plans as guidance. The form is a way for the non-ERISA industry to set a standard and regulate themselves before the government steps in, Davis said.  

Toth noted that some vendors will automatically provide disclosures to non-ERISA plans, either because they feel it is a best practice or because their system can’t differentiate between ERISA and non-ERISA plans.

Davis said the preference is to provide the information to participants before they make investment decisions. For one thing, participants should be informed of any contract surrender charges so they know what they are getting into.  

The Model Disclosure Form is comprised of: 

  • Explanation of the form; 
  • The DoL’s model comparative chart for fees; 
  • Instructions for participants; and 
  • Instructions for completing the form. 


The form is completed on a per-product basis and includes: 

  • Identifying information of the adviser or vendor; 
  • List of services and how they are provided: 
  • Fees that could be charged to participants; and 
  • Annuity product charges and custodial account charges. 


According to Davis, the form discourages the use of words such as “varies.” The description of how fees are calculated should be included. In addition, the form should let participants know if fees are waived once an account reaches a certain size.  

More information can be found at www.SaveMy403b.org, under 403(b) Facts.