EBSA Press Release: Labor Secretary Herman Announces New Disclosure Information on 401(k) Fees [07/15/1999]

Archived News Release — Caution: Information may be out of date.

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Secretary of Labor Alexis M. Herman today joined with representatives of the American Bankers Association, the American Council of Life Insurance, and the Investment Company Institute to release new 401(k) fee disclosure tools. These new tools will help employers, especially small employers, understand the investment fees and expenses which are charged to 401(k) retirement plans.

"Today 401(k) plans have over $1 trillion in assets. Fees and expenses can result in lower retirement income for workers," Secretary Herman said. "We challenged the pension community to create a simple and uniform tool that small businesses can use to compare fees and thus lower costs. Three industry groups worked together to develop this new format."

The "401(k) Plan Fee Disclosure Form" features a flexible format which employers can use in whole or in part, depending on the type of plan investments and services. In addition, the form provides employers with a handy way to make cost-effective decisions and compare the investment fees and administrative costs of competing providers of plan services.

The 401(k) fee form contains basic information employers may use in calculating and accounting for the total costs of operating a plan. It contains: an overview of the purpose of the form and general description on calculating 401(k) fees; a schedule which summarizes the total plan fees and expenses; and additional schedules providing information on investment product fees and estimates, plan administration expenses, one-time start up and conversion expenses and service provider termination expenses.

A new Labor Department pamphlet, "A Look at 401(k) Fees For Employers," highlights the overall obligations employers must fulfill in operating a plan. The pamphlet, which employers may use in conjunction with the form, describes the various fiduciary standards they must comply with under federal pension law. The pamphlet lists 10 basic questions employers should answer in considering fees and expenses paid for services. This includes employers' obligation to assure that fees paid by 401(k) plans are reasonable.

The Secretary continues to encourage the pension community to develop additional educational resources to help employers and workers understand these issues.

Both the form and publication are available through the department's website at www.dol.gov/dol/pwba or at the website of any of the organizations: www.aba.com, www.acli.com or www.ici.org. The public can also obtain this material from the American Bankers Association at (800) 338-0626.

Archived News Release — Caution: Information may be out of date.