The Department of Labor (DOL) now requires employers/plan sponsors to provide information to employees/plan participants regarding the fees they are paying for their retirement plans. It is no longer enough to rely on your plan service provider to communicate this information to employees. While they certainly may, it is your responsibility to ensure that the information is complete, clear, and easy-to-understand.
To better understand the requirements I met with Kirsten Curry, President of Leading Retirement Solutions, LLC. She offered the following tips for employers to help get them prepared for the change:
What you need to know:
– July 1, 2012: all service providers must disclose all fees to plan sponsors.
– August 30, 2012: the participant assessed fees must appear on participant statements.
It is in your best interest as an employer to make certain that your employees are not surprised by the information they will see. They are more likely to read a communication from you explaining what will change than from their retirement plan provider. You have the opportunity to present the information in a transparent way that will help maintain the trust you have built with them. Start preparing now for questions your employees may ask.
Here are four steps to get you started:
- Obtain information from plan
- Compare the investment options to other plans
- Consider changing service level
- Reconsider how plan fees are paid
At each of these steps it is advised that you make certain that you understand and document your evaluation process and decisions.
Make certain you know not only what information your employees will receive from the plan, but what it will look like so you know where you will be required to provide information and possibly where you want to provide “translation” into language that your employees will understand.
Contact your service providers to arrange for support. Make sure you are as up to date as possible on the details of your plan including an understanding of what the fees are for, what services you are getting for the money, and why you went with the service you did in the first place. You also want to have some understanding of how the plan is performing, if only generally. You should have direct and quick access to a plan representative that is willing to take the time to speak individually with each of your employees to explain how their particular plan is performing.
Kirsten cautions you to not be surprised if your plan representative tells you that the information they are providing is still preliminary. It is! The Department of Labor has yet to adopt the regulations. Also, don’t wait for the final draft is adapted by the DOL as it is not uncommon for them to wait until the last minute to provide final information. Learn what you can to get as prepared as you can by asking to see preliminary information. You do not want to wait until the last minute. It is entirely possible that, based on the regulations, you will be required to implement the changes before they are adopted by the DOL. This is nothing new for the plan representatives, who will be prepared to work with you now.
In our next blog I will be sharing employee scenarios/questions you may face as you roll out this change. We want to hear from you – let us know what you are doing now to plan for this change. And if there are specific employee questions and scenarios you think you may need to address.
An attorney and entrepreneur, Kirsten Curry is the founder and President of Leading Retirement Solutions (LRS), a full service company retirement plan provider. Curry founded LRS with a commitment to three core principles: transparent and un-biased services; custom open architecture retirement plan solutions; and access to traditional and non-traditional investments. Her company offers consulting services, plan design, administration, recordkeeping, government reporting, and correction and compliance services.
Curry is dedicated to supporting and promoting businesses, their owners, operators, employees and investors. She is committed to providing consultative and strategic company sponsored retirement plan services for new and seasoned business operators; designed to successfully transition clients through each business cycle, assuring business and personal objectives are achieved.