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Performance Disclosure Question

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We have risk based allocation models in our plans. These funds that are included in the models are also fund options in the plan. I'm attaching an example of what I mean.

When we publish past performance, we show the performance of both the individual funds in the plan and the models net of mutual fund fees.

Some of our plans charge some fees to the plan. All fees are disclosed in the 404(a)(5) notice to participants.

1. For the models, is it required to show fees charged to the plan and allocated across the trust? How would that possibly be done?

2. Does ERISA have an issue with reporting back tested data? i.e. past performance


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  • 4 years later...

Custom risk based models (unless they are simply recommended allocations that are implemented via suggested investment elections) should be reported on 404(a)(5) as variable investments just like mutual funds. The expense information that must be part of the 404(a)(5) disclosure is also the same as mutual funds and is often the weighted average expense ratio of the underlying funds based on the mix in the particular model.

Fees charged to the plan and allocated to the participants do not belong in the investment section of the 404(a)(5) disclosure. They must be disclosed but they are disclosed in the section describing other plan fees.

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