The Department of Labor on Tuesday proposed requiring 401(k) plan fiduciaries to supply investors with standard account summaries that will clearly state fees, expenses and any administrative costs such as legal, accounting and recordkeeping chargesin actual dollars; performance and comparable benchmark returns; investment options; and how to obtain more detailed information, including education and/or advice.
The Labor Department projects the disclosure will result in $6.1 billion in savings for investors between 2009 and 2018, a third of it due to lower fees due to increased transparency. That works out to a savings directly related to fees of $2.1 billion, or $225 million annually.
The other two-thirds in savings will be employees time, as they will no longer have to search for the information in various places, Bradford P. Campbell, assistant secretary for the Employee Benefits Security Administration told Dow Jones.
Our proposal is consistent with public consensus that workers need clear and concise information, not dozens of pages of legalese, about the investment options available under their plans, and that they would benefit greatly from having that information in a comparative format, U.S. Secretary of Labor Elaine L. Chao said in a statement.
One of the departments top priorities is improved disclosure to workers that will give them the information they need to make informed investment decisions.
The new regulations will go into effect on Jan. 1. Those wishing to comment on the proposal may reach the Department of Labor electronically at: e-ORI@dol.gov or www.regulations.gov, or by mail: Attention Participant Fee Disclosure Project, U.S. Department of Labor, Employee Benefits Security Administration, Room N-5655, 200 Constitution Ave. N.W., Washington, D.C. 20210