DOL Finalizes New ERISA Disclosure Rules for Participant-Directed Retirement Plans

DOL Finalizes New ERISA Disclosure Rules for Participant-Directed Retirement Plans

by W. Mark Smith, Mary Thornton Payne, and Jamey A. Medlin

On October 20, 2010, the U.S. Department of Labor (DOL) published a final regulation imposing new disclosure requirements for participant-directed individual account retirement plans. The final regulation requires the plan administrator of such a plan to:

  • Provide participants quarterly statements of plan fees and expenses deducted from their accounts;
  • Also provide, prior to a participant's initial plan investment and at least annually thereafter, certain information about both the plan and the investments available under the plan, including the cost of those investments;
  • Use prescribed methodologies when calculating and disclosing expense and return information about investments;
  • Present that information in a format intended to facilitate "comparison shopping" among the plan's investment options; and
  • Give participants access to certain additional investment information when received by the plan or on request.

While a number of plans already offer participant disclosures to similar effect, the regulation materially revamps the regulatory mandates for affected plans, in ways that will necessitate changes to the systems and processes of many plan sponsors and platform providers. The final regulation is accompanied by a press release, a fact sheet, and a Model Comparative Chart, which is reproduced at the end of this Legal Alert.

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