Headlines about "Ret plan investments - costs"

Gathered from the web by the editors at BenefitsLink.com.

[Guidance Overview] DOL Makes Small Changes to Field Assistance Bulletin 2012-02 (Participant Disclosure FAQs)
"DOL revised its response to Q-19 regarding website performance information, making clear that a website in connection with a variable return DIA should be updated to show 1-, 5-, and 10-year performance information for the period ending on the most recently completed calendar quarter." (Groom Law Group)

ERISA Fee Benchmarking Rules and Practices Can Be Useful Even to ERISA-Exempt Public Plans
"Although public plans are not subject to ERISA, many times the guidelines are used as a best practice. ERISA section 404(a) requires that fiduciaries elicit information necessary to assess not only the reasonableness of the fees to be paid for services, but also the qualifications of the service provider and the quality of the services that will be provided. Benchmarking allows plan sponsors to do a fee to services comparison of other plans in their benchmarking group. Among other things, this will help determine if the plan is receiving the right amount of fiduciary support from the current service providers." (National Association of Governmental Defined Contribution Administrators)

Think Twice About Rolling Your 401(k) into an IRA -- Consider Investment Management Fees When You Receive New Disclosure Report
"Before you make a move, compare the fees of your 401(k) plan's funds with any retail funds you're considering at the IRA rollover institution. The new 401(k) fee-disclosure rules that become fully effective in August will make this comparison easier. [The author's] recent post showed average and median fees for various types of mutual funds. You'll want to invest in funds with expenses well below these averages, and there's a good chance your 401(k) plan will accomplish this." (CBS MoneyWatch)

DOL Emailing Form 5500 Filers to Raise Awareness About Schedule C
"Scott C. Albert, chief of the reporting and compliance division at the Department of Labor's Employee Benefits Security Administration, said recently that DOL is sending emails to Form 5500 filers if they are large employee benefit plans that have not included a Schedule C. Plan sponsors are required to report on Schedule C each service provider that received $5,000 or more in direct or indirect compensation from a plan.... [A]lmost all large plans require Schedule C because of investments in mutual funds." (Bloomberg BNA)

Educational Web Page on Retirement Plan Fees Comes Online from The Principal
"The online resource offers: [1] An explanation of retirement plan costs; [2] Tips on how to review plan services; [3] Help navigating cost considerations; [4] Tips for evaluating fee reasonableness; [5] Tips for addressing participant questions[.] The Principal also offers a new Fee Reasonableness Review Checklist, a sample template financial professionals can share with plan fiduciaries to help guide them through the evaluation process." (The Principal Financial Group)

[Opinion] Combination of Fee Disclosure DOL Regs and 'Strict Liability' Under Code Section 4975 Might Be Explosive
"Though [it is possible to] get lost in the detail of timely meeting the new disclosure requirements, the real impact will occur once the dust settles, and when [there are] all manner of prohibited transactions -- arising either from failure to properly disclose compensation or from what is revealed by the disclosure itself.... [One] of the most serious of the impacts of 408b2 promises to arise from application of Code section 4975, not from ERISA Section 406 to which 408b2 is connected.... Once the prohibited transaction occurs, the tax liability attaches, and there is a duty to report and pay that tax. The IRS has no ability to waive that tax -- unlike the prohibited transaction penalty under ERISA." (Business of Benefits)

Time's Up on 401(k) Fee Disclosure Compliance: New Potential Breaches of Fiduciary Duty Looming
"[Ian Dingwall, EBSA's chief accountant,] suggested that auditors call their clients to make certain that they, as plan fiduciaries, have a list of service agreements and know which ones are not in writing by July 1. A service agreement that is not in writing is not considered ďż˝reasonableďż˝ under the DoL regulations, and therefore results in a prohibited transaction.... Putting plan auditors in the position of enforcer of the service-provider disclosure requirement is beyond the scope of an auditorďż˝s responsibility." (CFO)

[Guidance Overview] Final EBSA Fee Disclosure Requirements Addressed in Field Assistance Bulletin 2012-02
"The [Field Assistance Bulletin (FAB)] contains 38 questions and answers relating primarily to participant-level disclosure but also addressing service provider disclosure. It includes many helpful and practical solutions to uncertainties in the final disclosure regulations. It is clear from the text of the FAB that the DOL has no intention of extending either of disclosure deadlines. However, in Q&A 37, the DOL recognizes that many service providers and plan administrators may have initiated or even made disclosures prior to publication of the FAB based on interpretation of the regulations and may be unable to modify their disclosures by the deadlines without unreasonable difficulty or cost." (Warner Norcross & Judd LLP)

[Guidance Overview] FAB Addresses Investment Disclosures to Participants About a Plan's Designated Investment Alternatives
"Do the investment disclosure requirements apply to alternatives closed to new investments? Yes. If participants are allowed to retain current investments in a given fund, then the comparative chart of investments must include the fund, even though participants cannot move money into the fund. The plan administrator could (but need not) limit the disclosures to those participants invested in the fund." (SunGard Relius)

Good-Faith Efforts Already Taken to Comply with Participant Fee Regs Won't Be Penalized, EBSA Says
"[Phyllis C. Borzi, assistant secretary of labor for the Employee Benefits Security Administration] said plans that have already distributed, or are getting ready to distribute, their participant-level fee disclosures under Section 404(a) of [ERISA] will not be subject to DOL enforcement action if they acted in good faith to comply with the rule [prior to the recent issuance by the EBSA of 'Frequently Asked Questions' about the fee disclosure regulations].... However, Borzi cautioned that plans that discover they were not in totally in compliance with the participant disclosure rule in light of the FAQs will need to develop a plan to comply with the law before their next participant disclosure." (Bloomberg BNA)

Trends from the 2012 Fiduciary Survey of Investment Advisors and Registered Representatives
"The survey not only sought advisors' opinions on the fiduciary standard but also gauged their understanding of what such a standard means now, or would mean, to their businesses. Key findings in the first report on the survey pointed out that registered reps and investment advisors in the field believe that extending the fiduciary standard would not cost investors more for advice, limit access to advice or products nor price investors out of the market for advice." (AdvisorOne)

[Guidance Overview] DOL Addresses Definition of Designated Investment Alternatives for Purposes of Required Participant Fee Disclosures
"The issue that has generated more attention and discussion regarding both the participant (404a-5) and the service provider (408b-2) regulations is the issue of what constitutes a designated investment alternative (DIA).... The issue is significant because an employer annually must provide participants a significant amount of investment information with respect to each DIA. Furthermore, under the 408b-2 regulations, a covered service provider that provides a platform of DIAs in connection with recordkeeping or brokerage services would need to make annual investment disclosures about the DIAs to the plan fiduciary. In this technical update, [the authors] discuss clarifications of the definition of a DIA provided by the recently released FAB 2012-2." (SunGard Relius)

Recent Case Emphasizes Importance of the Retirement Plan Fiduciary Decision-Making Process
"[T]he recent district court decision in Tussey v. ABB, Inc., which levied a $35.2 million judgment against the employer-fiduciary (ABB), emphasizes the importance of a prudent decision-making process. Here are some of the major missteps made by ABB and the key takeaways for other plan fiduciaries[.]" (Poyner Spruill)

[Guidance Overview] DOL FAQs Address Implementation of Participant-Level Retirement Plan Fee Disclosures
"These long and detailed FAQs underscore the complexity of the new disclosure requirements.... The DOL also indicated that it is working on a second set of FAQs focused on the service provider fee disclosures. As a reminder, calendar-year plans are required to make their initial annual disclosure to participants no later than August 30, 2012 and provide their first quarterly statements no later than November 14, 2012." (Thomson Reuters/EBIA)

[Guidance Overview] DOL FAQs Address Retirement Plan Fee Disclosures (PDF)
"DOL acknowledges that it may be unduly difficult or expensive to bring such disclosures into compliance ... before the Regulations' respective effective dates [so the agency stated that] it generally will take no enforcement action against a covered service provider or plan administrator who has acted in good faith based on a reasonable interpretation of the Regulations and who also establishes a plan for complying with the requirements ... in future disclosures.... The Bulletin provides additional guidance with respect to the following topics:" (Sutherland)

[Guidance Overview] Describing Plan Administration Expenses When Making Participant Fee and Investment Disclosures
"Plan administrators annually must furnish an explanation of any fees and expenses for general plan administrative services (e.g., legal, accounting, recordkeeping), which may be charged against a participant's individual account, as well as the basis on which such charges will be allocated (e.g., pro rata, per capita) to, or affect the balance of, each individual account. The DOL explained that the annual administrative expense disclosure may be expressed in terms of an amount, formula, percentage of assets or a per capita charge, but must be written in a manner calculated to be understood by the average plan participant. How specific the disclosure must be depends on the facts and circumstances of the service and the fee or expense being disclosed." (SunGard Relius)

[Guidance Overview] DOL FAQs Clarify Participant-Level Disclosures, 'Good Faith' Standard for Enforcement Purposes
"The [ERISA section 404(c)] disclosure conditions -- which were effective for plan years beginning after November 1, 2011, and are therefore already in effect for many plans -- generally operate by reference to the participant disclosure rules. With the delay in the initial disclosure date, it was unclear whether the failure to provide the initial disclosures after the effective date of the section 404(c) changes would be considered noncompliance with the section 404(c) rules. DOL has now clarified that a plan need not furnish the participant disclosure information before it must be furnished under the new regulation to maintain section 404(c) status." (Morgan Lewis)

[Guidance Overview] New Q&As in DOL Field Assistance Bulletin 2012-2 Clarify, Expand Fee Disclosure Regs
"In 23 pages, the FAB provides a series of 38 FAQs addressing a variety of topics in the regulation. The answers provide examples and discussion on the disclosure requirements, amplifying many points that were previously unclear. They also set forth new rules, some of them quite surprising to those who have studied the regulation over the last year and a half, as well as some valuable exemptions. Sprinkled throughout is DOL commentary on fiduciary practices. Without a doubt, the FAB will mandate fine-tuning of programs and systems to comply with the new rules." (SunGard Relius)

[Guidance Overview] More Welcome 403(b) Relief from DOL
"The DOL, in its final 408(b)-2 regulation, issued relief for 403(b) plans, under which information related to certain contracts would not be subject to the the new fee disclosure rules. Though this was very helpful, it did not specifically address the 404a-5 participant disclosure regulations for the same type of contracts.... [The recently issued FAQs in Field Assistance Bulletin 2012-2 make] it clear in Question 2 ... that the 408b-2 relief for 403(b) plans also is extended to the 404a-5 requirements for said plans, on the same terms and conditions." (Business of Benefits)

[Guidance Overview] DOL FAQs Address Retirement Plan Fee and Expense Disclosure Rules
"EBSA is working on a second set of FAQs that focuses specifically on the disclosure rules for covered service providers under ERISA Section 408(b)(2). However, these current FAQs are relevant to covered service providers as they offer guidance on what information covered service providers must give plan administrators to help the administrators comply with their disclosure requirements." (Practical Law Company)

[Opinion] Text of Comments by ASPPA on Proposed Changes to IRS Regs on Purchase of Qualifying Longevity Annuity Contracts Under DC Plans
"While [ASPPA appreciates] the desire to be consistent with the intent of Code Section 401(a)(9) and not to permit greater deferral of distributions than would otherwise be permitted under the required minimum distribution rules, ASPPA believes that increasing the percentage limitation would provide greater flexibility and encouragement for participants to utilize longevity annuity options. As proposed, only participants with account balances of $400,000 or larger would be able to pay premiums up to the full dollar limit for a QLAC. The result may be that those participants with smaller account balances, who may be the people most in need of income security in the later years, will not have the ability to secure a significant income stream through a QLAC and may not take advantage of this opportunity." (ASPPA)

[Official Guidance] Text of DOL Field Assistance Bulletin 2012-02: FAQs on Participant-Level Fee Disclosures and Service Provider Fee Disclosures
38 Questions and Answers, supplementing the final regulations. Example: "Paragraph (c)(2)(i)(A) of the [final participant-level fee disclosure] regulation requires an explanation of any fees and expenses for general plan administrative services which may be charged against participants' and beneficiaries' accounts and the basis on which such charges will be allocated. How specific does this explanation have to be in order to comply with this requirement?" (Employee Benefits Security Administration)

As a Plan Sponsor, Are You Prepared to Provide Fee Disclosures to Participants?
This 39-minute video includes a description of the format of Vanguard"s reporting of its fees as a service provider to its plan sponsor customers, and what Vanguard will be doing to assist its customers with the participant-level fee disclosures. (Vanguard)

[Opinion] Revenue Sharing on Trial: Complex, Inefficient and Unnecessarily Expensive
"The basic problem with revenue-sharing is that it is an inefficient and opaque way to compensate service providers. Its needless complexity leaves many plan sponsors unable to line up costs with the value of services so that they can prudently fulfill their fiduciary duty to determine the reasonableness of costs. In this way, revenue-sharing is like any other third-party payer system. In cases such as Tussey, revenue-sharing costs incurred by plan participants went unnoticed by the plan sponsor and therefore remained unknown, harming plan participants while generating [what a court called] 'unreasonable' profit for Fidelity." (Morningstar)

[Guidance Overview] Electronic Delivery of Disclosures under the Participant Fee Disclosure Regulation (PDF)
"The interim e-delivery guidance under Technical Release 2011-03R provides more liberal and user friendly options for e-delivery of plan-related information than for investment-related information. To provide all required disclosures using the same e-delivery option one of the two general e-delivery options described ... must be used, however both are complex and challenging to administer." (ING)

[Guidance Overview] How to Protect Your Company's 401(k) Plan Committee under New Service Provider Fee Disclosure Regs
"First, consult with your company's attorney to find out if you are the fiduciary of your company's 401(k) plan. Second, get a fiduciary liability policy before the rule goes into effect July 1. These plans are typically not expensive and can cover all individuals, trustees and board members who act as fiduciaries of the company's retirement plan. Finally, get a new [third-party] administrator for your plan that has low fees and accepts fiduciary responsibilities." (Smart Business)

[Guidance Overview] Final DOL Regs Address Fee Disclosures to Participants in Self-Directed Retirement Plans
"Plan sponsors of covered participant-directed individual account plans should review their summary plan descriptions, plan prospectuses, benefit statements, plan websites and other plan communications to determine what additional information must be provided under the final regulations and how they will comply with the information and disclosure requirement." (Pillsbury)

[Guidance Overview] DOL Issues Final Regs on Pension Plan Service Providers; Health & Welfare Plan Service Providers Next in Line?
"Failure to comply with the final regulations will cause the plan and service provider arrangement to be a prohibited transaction and subject the service provider to certain excise taxes under Code section 4975.... In light of the DOL's intention to include welfare plans under these regulations in the future, it may be wise for service providers and plan fiduciaries to begin reviewing any service provider arrangements under these plans as well." (Pillsbury)

[Guidance Overview] Action Items for Plan Fiduciaries: Handling Fee Disclosures by Service Providers, and Fee Disclosures to Participants
Includes a useful chart of the various deadlines that apply to participant-Level fee disclosures. (Pillsbury)

[Guidance Overview] Tussey v. ABB, Inc. Shows Importance of Implementing Process for Prudent Decision-Making and Following Plan Documents
"This case serves as a reminder to fiduciaries wrestling with decisions that may impact the use of plan assets of the importance of ensuring that they go through a documented process of determining whether the fees incurred by their plan are reasonable. Ensuring that a fiduciary has engaged in a prudent process with respect to fees paid to plan vendors will become even more important when the [DOL's] revised Section 408(b)(2) regulations become effective July 1, 2012." (Miller Chevalier)

Vanguard Reports April 2012 Expense Ratio Changes
"From time to time, a mutual fund's expense ratio -- in essence, operating expenses that are passed on to shareholders, expressed as a percentage of assets -- can change in response to changes in fund assets and any changes in the cost of managing the funds. For example, economies of scale resulting from an increase in a fund's total assets because of market appreciation or investor cash flow can result in a reduction, while a decline in assets can cause the expense ratio to rise. Because investment costs directly affect net returns, [Vanguard believes] it's important for you to be aware of such changes." (Vanguard)

Issues that Must Be Addressed to Prevent Your 401(k) Plan from Becoming an Easy Target for Knowledgeable Plaintiffs' Attorneys (PDF)
"If anyone doubts that ERISA class action litigation is alive and well, they should read the decision in Tussey v. ABB Inc. ... Not only were the plaintiffs awarded $36 million, the arguments the plaintiffs' attorneys ... made were quite sophisticated and clearly resonated with a judge who did her homework. The takeaway from this case is that fiduciaries must document what they did, why they did it, and that their actions were in the best interests of the plan and the participants." (Investment Horizons, Inc.)

401(k) Fee Litigation, April 2012
"Initially, the lawsuits were brought by plan participants against plan sponsors and alleged that, by allowing plan service providers to receive revenue sharing payments, the plan sponsors caused the participants to pay excessive fees, in breach of the sponsors' fiduciary duties to the participants. The focus of these lawsuits against the plan sponsors has evolved over time to include broader challenges to, among other things, the plan sponsors' selection of actively managed mutual funds as plan investment options. [The target page links to the Groom chart of 'Participant Claims Against Sponsors and Related Fiduciaries' and 'Plan Fiduciary Claims Against Plan Providers' and 'Plan and Participant Claims Against Plan Providers.']" (Groom Law Group)

Ten Things Plan Fiduciaries Should Avoid (PDF)
"In recent court case, Tussey v. ABB, Inc., ... the judge found that the plan fiduciaries breached their fiduciary duties and were jointly and severally liable for $13.4 million lost by the Plan due to failure to monitor recordkeeping fees and negotiate rebates and $21.8 million lost by Plan due to mapping one investment fund to another. In addition, the service provider was held jointly and severally liable for $1.7 million for lost float income. Lessons learned from this case are at least 10 things Plan fiduciaries should avoid[.]" (ERISAdiagnostics, Inc.)

[Opinion] ASPPA Letter to EBSA on Asset Allocation Strategies, Model Portfolios and Need for Transitional Relief
"The American Society of Pension Professionals and Actuaries ..., the Council of Independent 401(k) Recordkeepers ... and the National Association of Plan Advisors ... are writing to request that [DOL] provide guidance which clarifies that asset allocation strategies and models are not themselves Designated Investment Alternatives ... under both DOL Regulation Section 2550.408b-2(c) (the '408(b)(2) regulation') as well as DOL Regulation Section 2550.404a-5 (the '404(a) regulation') ... and to provide for a good faith transition period in recognition of the uncertainties that remain in regard to the regulations' application." (ASPPA)

[Guidance Overview] Availability of Class Actions Narrows, Could Mean Fewer 401(k) Fee Cases
"[T]he U.S. Supreme Court's 2011 decision in Wal-Mart Stores v. Dukes ... and other recent cases have led to a more rigorous application of the rules for establishing a bona fide class. This has likely contributed to the waning of new excess fee cases and may have been a factor in recent settlements." (The Wagner Law Group)

[Guidance Overview] OK to Levy Recordkeeping and Investment Management Fees Only on Certain 401(k) Participants? Federal Case Asks But Doesn't Answer
"A significant issue raised but not resolved in the ABB case -- a matter that may very well be the next frontier in fiduciary oversight litigation -- is, whether the record keeping costs of a 401(k) plan may be borne exclusively by those participants whose investment funds enjoy revenue sharing (also known as 12b-1 fees) while participants whose accounts are invested in investment funds with no revenue sharing pay little or nothing." (Troutman Sanders)

[Guidance Overview] Recent ERISA Fee Litigation: Key Lessons for Plan Fiduciaries
"A recent Federal District Court decision [out of Missouri] dealing with ERISA plan fees is generating substantial discussion in plan fiduciary circles, not only because of the significant liability imposed on fiduciaries (almost $40 million), but because of its discussion of some key fiduciary issues.... Tussey v. ABB, Inc. ... may provide significant guidance to plan fiduciaries in their determination of the 'reasonableness' of an arrangement when a service provider engages in revenue sharing. The Tussey case also contains some important general lessons for plan fiduciaries." (Orrick)

[Guidance Overview] 401(k) Plan Fees in Turmoil: District Court in Tussey Case Finds Fiduciary Breaches but Third Circuit Does Not
"Overall, the courts' decision in Tussey and Renfro appear to show that the ... outcome is less dictated by the choices made by plan fiduciaries than by the thoroughness and care by which the plan fiduciaries investigated, considered and compared their investment selections and fees. Accordingly ... it is critical for plan sponsors to understand and follow their plan's investment policy procedures and guidelines, to understand their plan's fees and compare them to the marketplace, to document all actions taken with respect to investment selections and plan fees, and to act for the exclusive benefit of plan participants and beneficiaries." (Trucker Huss)

[Guidance Overview] Considerations for Plan Sponsors and Fiduciaries in Minimizing Potential Fiduciary Liability After Tussey v. ABB, Inc.
"[The Tussey v. ABB, Inc. case] suggests that plan sponsors and fiduciaries should press service providers/recordkeepers to provide enough information about revenue sharing arrangements to allow them to: [i] Calculate total revenue sharing paid to service providers; [ii] Determine the plan administrative costs that would be charged in the absence of revenue sharing; [iii] Compare to the level of plan administrative costs paid by plans of comparable size; [iv] Determine whether revenue sharing payments provide the service providers/recordkeepers with compensation beyond the administrative cost in the absence of revenue sharing (i.e., beyond the ďż˝market rateďż˝); and [v] Negotiate rebates of revenue sharing that exceed the market rate." (Porter Wright)

[Guidance Overview] Fee Disclosure Wasn't Enough to Shield Retirement Plan Fiduciaries from $35 Million Judgment
"[T]he [Missouri District] court ruled that the corporate fiduciaries of a 401(k) plan violated their fiduciary duties by failing to monitor third-party administrative costs, negotiate plan rebates and prudently select and monitor investment options. The court held the fiduciaries liable for $35 million in damages, concluding that, although the fiduciaries' actions conformed to DOL regulations relating to fee disclosure, their failure to follow their investment policy statement, understand the payments being made under the plan and to investigate the best available investment alternatives resulted in a breach of fiduciary duties." (Littler)

Sample of Enhanced All-In Fee Report
"[This sample annual fee report] has been enhanced to provide additional fee information in accordance with the Department of Laborďż˝s (DOL) rules under ERISA section 408(b)(2).... This fee disclosure document is comprised of three components: (i) a Summary Fee Report that provides a consolidated view of [the] plan's fee information; (ii) [the] enhanced All-in Fee Report, which contains the detailed fee information ...; and (iii) an Appendix containing important information required by the DOL fee disclosure regulation." (Vanguard)

[Guidance Overview] Summary of Final DOL Regs on Service Provider Fee Disclosures (PDF)
"The final rules modify the interim rules by providing that frozen 403(b) annuity contracts or custodial accounts that are subject to ERISA will not be considered covered plans and are not subject to the fee disclosure rules [if the plan sponsor] had no obligation to make, and did not make contributions (including employee salary reduction contributions) to such contracts or custodial accounts after January 1, 2009; the contract or account was issued to a current or former employee before January 1, 2009; [and other prescribed conditions are met]." (Prudential)

Operational Changes in Defined Contribution Plans for Plan Sponsors to Consider in 2012
"Many plan fiduciaries may not be aware that it is both a fiduciary breach and prohibited transaction to allow the plan to pay more than what is considered reasonable expenses. In practice, how does a fiduciary determine if plan fees are reasonable? If you've taken your plan out to bid within the last three years, you should have current market information and documentation for your due diligence files to support the fees you are paying, or have taken action by going back to your service provider(s) to negotiate lower fees on behalf of plan participants." (Milliman)

GAO Report on Defined Contribution Plans: Approaches in Other Countries Offer Beneficial Strategies in Several Areas
"GAO was asked to examine, for selected countries' DC systems, (1) how are service providers overseen by regulatory agencies; (2) what key strategies are used to improve fee disclosure to participants; and (3) what key strategies are used to reduce fees? GAO selected Australia, Chile, Sweden and the United Kingdom based on, among other factors, the importance of the DC plans to the country's retirement system and the use of strategies to address service providers' fees." (Government Accountability Office)

Trends in the Expenses and Fees of Mutual Funds, 2011 (PDF)
"Over the past two decades, on an asset-weighted basis, average expenses paid by mutual fund investors have fallen significantly.... In 1990, investors on average paid 99 basis points, or 99 cents for every $100 in assets, to invest in equity funds. By contrast, expenses averaged 79 basis points for equity fund investors in 2011, a decline of over 20 percent from 1990." (Investment Company Institute)

[Guidance Overview] Failure to Monitor Fees Is Breach of Fiduciary Duty by 401(k) Plan Sponsor
"In Tussey v. ABB, Inc., [the federal district court for the Western District of Missouri] found that a plan sponsor breached its fiduciary duty to plan participants because it failed to monitor record keeping fees and revenue-sharing payments and paid record keeping fees in excess of the market cost to subsidize other record keeping services.... ABB sponsored two 401(k) plans that offered Fidelity Investments mutual funds as investment options. Fidelity was also the investment adviser and the record keeper. Fidelity then used some of those fees to offset losses it was taking on other services provided to ABB." (Fox Rothschild LLP)

Defined Contribution Plan Executives Say Fee Disclosure Rules Won't Help Much
"When asked the 'likely outcomes' of the fee-disclosure regulations for participants, 49% said the participants will be confused by the regulations, and 48% said the disclosure will have 'little impact' on participants, said a report on the survey.... Only 5% said the regulations would help participants make better investment choices, while 20% said participants would exercise greater scrutiny of fees." (Pensions & Investments)

[Guidance Overview] Court Finds a Neglected Investment Policy Statement Can Be Costly
"In 2000, without informing plan participants, the plansďż˝ investment committee took several steps that proved to be in conflict with its [investment policy statement, or "IPS"] and fatal to its legal defense.... The lengthy [Missouri District court] opinion holds additional lessons in how a company failed to follow a prudent process in its investment decisions, in monitoring plan costs, and in the penalties involved in ignoring its own IPS. Although it did not find that [the employer] concealed its fiduciary breaches, the court seemed troubled by what it called a ďż˝conflicted relationshipďż˝ with [the plan's investments provider (Fidelity)]." (fi360 blog)

[Guidance Overview] Failure to Monitor Recordkeeping Fees Is Breach of Fiduciary Duty
"In Tussey v. ABB, Inc., the US District Court for the Western District of Missouri held that a company breached its fiduciary duty to its 401(k) plans when it failed to monitor recordkeeping fees and revenue-sharing payments, selected more expensive share classes when less expensive classes were available, replaced an investment fund in violation of the investment policy statement and paid recordkeeping fees in excess of the market cost to subsidize other recordkeeping services." (Practical Law Company)

Investment Costs Hit Retirees with Double Whammy
"As [a table and chart show, at age 65, a high-expense portfolio] generates a withdrawal amount that's 8.3% lower than the amount for the low-expense portfolio[.] After 15 years, the gap grows to over 20%[.] This is a major reduction in spending power over time, and these numbers belie the seemingly innocuous single-digit-percentage point differences in expense ratios." (Vanguard)

[Guidance Overview] Failure to Monitor Revenue Sharing and Negotiate Rebates for Recordkeeping Fees Violated Governing Documents and Fiduciary Duties
"Although many of the [Missouri District] court's conclusions related to revenue sharing are grounded in its interpretation of a somewhat idiosyncratic [investment policy statement], its analysis strongly suggests that fiduciaries overseeing plans with revenue sharing arrangements really do need to know whether their service providers are receiving more than market compensation. This information allows plan fiduciaries to know whether requested hard-dollar service fees are reasonable, and when there are no hard-dollar fees, it allows fiduciaries with sufficient bargaining power to seek rebates." (Thomson Reuters/EBIA)

[Guidance Overview] Compliance Deadlines for Participant Fee Disclosures (PDF)
"To help navigate the participant fee disclosure rules, this Client Letter provides questions and answers about the final rules and includes two sample disclosure charts. One chart is the Model Comparative Chart issued by the DOL with the final rules that demonstrates how to disclose investment-related fees. The other is a sample template we drafted that might be used to comply with the plan-related fee disclosure." (Kelly, Hannaford & Battles P.A.)

[Guidance Overview] Are You Ready to Comply with Rules Requiring Investment and Fee Disclosures to Participants?
"A word of caution: If your plan is being operated as an ERISA section 404(c) plan, such that the plan's fiduciaries are not intended to be responsible for the consequences of participants' investment directions, you must comply with these new rules or run the risk of losing your 404(c) protection." (Chang, Ruthenberg & Long PC)

401(k) Excessive Fees Lawsuit against John Hancock Will Proceed
"In Santomenno v. John Hancock Life Insurance Company [3d Cir. April 16, 2012], the [U.S. Court of Appeals for the Third Circuit] vacated the district court's grant of summary judgment in favor of John Hancock regarding the plaintiffs' ERISA claims and remanded the case back to the U.S. District Court for the District of New Jersey for further proceedings." (The Pension Protection Act Blog)

[Guidance Overview] After 404a-5 Fee Disclosure Kicks In, When and How to Tell Participants About Changes to the Disclosed Information?
"For most plans, the plan administrator will need to make its first annual disclosure under the participant fee disclosure regulations by August 30, 2012 (some fiscal year plans will have additional time). The first quarterly disclosure for most plans will need to be made by November 14, 2012 (again, a little later for some fiscal year plans). If the plan makes certain mid-year changes to the disclosures, the plan administrator will need to provide a change notice to participants. In this Technical Update, [SunGard] will discuss the nature and timing of the change notice." (SunGard Relius)

The Unforgiving Compliance Clock of New 401(k) Rules
"Until now, sponsoring companies have been able to remain largely ignorant of the full extent of the fees coming out of their employees' accounts, though federal rules have long required awareness of these matters. New regulations from the U.S. Department of Labor seek to end this lack of compliance ... The quarterly account statements employees now receive from plan providers show returns net of fees. In the fall, these statements will show actual returns and fees in tabular form." (Smart Business)

[Guidance Overview] Third Circuit Rebuffs 401(k) Participants' Suit Under Investment Company Act Asserting Excessive Fees on Annuity Insurance Contracts
"The district court dismissed the [Investment Company Act of 1940] claims because only those maintaining an ownership interest in the funds could sue under the derivative suit provision and the participants are no longer investors in the funds in question. As to the ERISA claims, the [Third Circuit in Santomenno v. John Hancock Life Ins. Co.] dismissed because participants failed to make a pre-suit demand upon the plan trustees to take appropriate action and failed to join the trustees as parties. The Third Circuit affirmed with regards to the ICA claims, but vacated on the ERISA counts, holding that the statute does not require pre-suit demand or joinder of trustees." (Justia.com)

Vanguard's Sample Notice for Plan Sponsors, Providing Fee Disclosure to Participants
"This document provides sample language, intended as a general guide, for the participant notice." (Vanguard)

[Guidance Overview] It's Time to Comply with the New Retirement Plan Fee Disclosure Regulations
"Starting July 1, 2012, covered service providers for ERISA pension and 401(k) plans must provide plan fiduciaries with written information on fees and expenses 'reasonably in advance' of the date the contract is entered into, extended or renewed. For contracts or arrangements entered into before July 1, 2012, covered service providers must provide the required information to the responsible fiduciary before that date. In other words, plan fiduciaries need to make sure they have received written fee disclosures from existing plan vendors before July 1." (Poyner Spruill)

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