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Fund Change Notice and Related Fee Disclosures


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I have been searching and have been unable to find specific guidance regarding what level of disclosure is required for a fund change in a 401(k) plan in light of the new participant fee disclosure rules. It seems clear that general changes within the same fund after the plan has sent it's initial / annual disclosure out do not necessitate republishing the full disclosure with the new information although that information is to be published on the website (if applicable) as soon as possible. In the case where the fees are changing, however, as a result of swapping of one fund for another, it would seem that more detailed interim fee information should be provided. Is it appropriate / sufficient to provide a comparative chart comparing the old and new fund as part of the fund change notice but not redo the complete disclosure for the plan until the next annual statement? Is it arguably possible to do less and not provide fee information on the new fund in some comparative format? Thanks.

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I have been searching and have been unable to find specific guidance regarding what level of disclosure is required for a fund change in a 401(k) plan in light of the new participant fee disclosure rules. It seems clear that general changes within the same fund after the plan has sent it's initial / annual disclosure out do not necessitate republishing the full disclosure with the new information although that information is to be published on the website (if applicable) as soon as possible. In the case where the fees are changing, however, as a result of swapping of one fund for another, it would seem that more detailed interim fee information should be provided. Is it appropriate / sufficient to provide a comparative chart comparing the old and new fund as part of the fund change notice but not redo the complete disclosure for the plan until the next annual statement? Is it arguably possible to do less and not provide fee information on the new fund in some comparative format? Thanks.

Here is a sample of the "Newkirk" change notice.

FeeDisclosureChangeNoticeSample033012.pdf

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Thanks, Benji. This is very helpful and is consistent with what I've seen many others doing with respect to fund changes but I've recently run into one that has bare bones info and a suggestion that they can link to the fund's website for a prospectus and more information. The providers have suggested they think that is sufficient but that doesn't seem correct to me. Just trying to nail down exact guidance on what is and is not required given the new rules. At a minimum, seems a chart of the new expense and performance info should be included even if that is limited just to the new fund and/or doesn't provide a comparison to the fees of the replaced fund, etc. Welcome any additional thoughts or suggestions as to regulatory standards on this.

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Thanks, Benji. This is very helpful and is consistent with what I've seen many others doing with respect to fund changes but I've recently run into one that has bare bones info and a suggestion that they can link to the fund's website for a prospectus and more information. The providers have suggested they think that is sufficient but that doesn't seem correct to me. Just trying to nail down exact guidance on what is and is not required given the new rules. At a minimum, seems a chart of the new expense and performance info should be included even if that is limited just to the new fund and/or doesn't provide a comparison to the fees of the replaced fund, etc. Welcome any additional thoughts or suggestions as to regulatory standards on this.

See question number 22 of the FAQ's

FrequentlyAskedQuestions050712.pdf

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Thanks. Yes, I ran across that and understand it to basically say you don't have to prepare a whole new chart of all options, etc. I guess what I was really wondering is whether there is specific guidance on the fund notice piece that goes out and how detailed of info it needs to provide. Where I ended up was basically providing a short chart that compares the key expense and performance info of the old and new funds side by side so that there is comparative information for 404©, etc purposes of comparing the options but also fee disclosure info on the new fund. That seems consistent with what we see others doing but not what everyone is doing and I wasn't sure if there was a minimum level of info or particular format that was required. Thanks.

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