A Nutrition Label for Your Retirement Plan
Have you ever thought of your retirement plan as a nutrition label?
Apr 14, 2014
Like many Americans, my commute to the office often involves a detour to Starbucks for coffee and a pastry. One day as I perused the menu, I noticed that the nutritional value for each item was displayed. Was this a new requirement? How long had this information been displayed without my noticing it?
The truth is we live in a world where disclosure is the order of the day. While many of us are on “disclosure overload”, this information can help us to make better choices for our health, our lives and our retirement.
Take the recent DOL regulations requiring most retirement plan service providers to make a written disclosure of their service, fiduciary status and total fees and compensation. The intent of the disclosure was to help plan fiduciaries understand the fees charged to the retirement plan.
Unfortunately, in practice, many of the disclosures are so lengthy and filled with legalese that plan fiduciaries have difficulty identifying the applicable fees. To combat this, the DOL recently issued a proposal requiring covered service providers to furnish, under certain circumstances, an explanation guide along with the Fee Disclosure.
Specifically, the guide must be provided if the disclosure is:
- Not contained in a single document or
- Doesn’t contain a single document which exceeds a specific number of pages. However, the DOL has yet to specify the number of pages that would trigger the requirement for an accompanying guide.
The guide is required to contain a reference to both the document and the page number for each fee required to be disclosed. The guide must also contain contact information in the event the plan fiduciary has any questions related to the fee disclosure information.
Fee disclosures are still a relatively new concept within the retirement world. As additional requirements are released and plan fiduciaries become more educated retirement consumers, they, too, will be able to make informed decisions to “cut the fat” and ensure the health of their retirement plan.
If you have any questions about fee disclosures or anything concerning the DOL, let us know. We would love to help.