FULL DISCLOSURE: Richard J. Anzelone, managing director for StrategicPoint Investment Advisors, with Betsey A. Purinton, managing director and chief information officer at the company. Anzelone says the effectiveness of the new disclosure reports remains to be seen.
New federal transparency rules will help employees participating in their company’s 401(k) plan become better educated and more aware of the plan’s intricacies.
In February, the U.S. Department of Labor’s Employee Benefits Security Administration issued the rules in the hope that participants and their employers will learn more about the fees and expenses associated with their retirement plan. In addition, plan administrators must also provide understandable investment-related information in order to better assess investment options.
By Aug. 30, employers offering a 401(k) received new notification forms from their service provider, detailing the plan’s costs, performance data on all investment options and the performance of benchmarks in order to provide a comparison. They must reveal the compensation they receive to administer the plan and whether or not they are serving as fiduciaries – investors – to the plan. In most cases, however, the employer acts as the fiduciary. The notification is designed to aid the employer to assess the reasonableness of the plan, including compensation paid to the service providers.
A second disclosure, a quarterly notice to employees, will explain how much each participant is paying in fees, including any charges related to 401(k) loans. The quarterly report is to be sent by Nov. 15.
According to Amy Guldhauge, the treasurer at Starkweather & Shepley Insurance Brokerage Inc. in East Providence, their firm has taken the changes in stride. “It hasn’t caused any problems for us. We use an outside company that is taking care of that compliance for us. We still have to take part in communications, getting that information out to people. Everything has been done in a timely manner and the report is very informative. We haven’t seen anything negative,” she said.
Richard J. Anzelone, managing director and chief compliance officer for StrategicPoint Investment Advisors of Providence, said the new reports are more helpful, but whether or not they will be effective is a different matter.
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