Disclosure of Costs to Participants

The Department of Labor is currently working on a regulation that will require greater disclosure of fees and expenses to participants. With that in mind, it would be a good idea for plan sponsors and providers to voluntarily begin providing additional information.

To help with that, the following is a disclosure form that was developed as a part of the settlement of a lawsuit.

As you can see, this disclosure is much more impactful and effective than what is currently being done.

EXHIBIT A

Important Facts About [Name of Plan]

This retirement [plan] is not free. [Provider] and the funds offered in the [plan] charge various fees and expenses. Many fund companies pay [Provider] in return for being offered as investment options, as well as for the recordkeeping and related services [Provider] provides. Funds are selected based on the revenue they pay to [Provider] and on [Provider’s] assessment of their quality and cost. Both [Provider] and the mutual fund companies seek to make a profit from the [plan].

Any fees that you pay as part of your retirement plan will have an impact on your savings over time. An investor in this [plan] pays [Provider] and the fund companies an average of __% of his or her account balance every year.

The table below shows the impact of the average fee on the account of an investor who saves $_______ [the rounded average annual investment] at the beginning of each year over a twenty year period, assuming that the investment portfolio (before fees) increases by 7% per year.

Year End of year balance
without fees End of year balance after
average fee
Total impact of average fees = $__________



Source: The Report to Plan Sponsor