Major New Duties for 401(k) Plan Sponsors and Vendors

Expanded Regulations Under ERISA

Louis S. Harvey

The year 2012 will see the full effect of a set of fee disclosure regulations for 401(k) and other defined contribution plans under ERISA (Employee Retirement Income Security Act of 1974). These fee disclosures extend beyond the mere preparation of a blanket statement, because they need to be specific to each plan and include a breakdown of the financial details of the plan's fees and expenses. The new regulations contain an intricate set of enforcement mechanisms and penalties that are new to retirement and investment advisors. The regulations require financial reports to three audiences that all need to be reconciled and, most importantly, used to determine if the fees and payments made by an ERISA plan are reasonable.