Participant Fee Disclosures

[Pammie57]

I recently took over a plan that was begun in 2024 in UGH!!  brokerage accounts.  It is moving to a platform in 2026.  They are asking about "when was the last "annual participant fee disclosure notice" sent to the participants.   I have no idea, but not sure how one prepares that when all participants are in separate brokerage accounts and the broker is not helpful at all.  (Fidelity brokerage for reference).  Any feedback or suggestions appreciated. 

[Peter Gulia]

If you’re asking about a 404a-5 disclosure (and someone assumes the plan’s administrator chose to follow that interpretation):

Even when a plan has no designated investment alternative, the administrator might have plan-related information to disclose (if not sufficiently explained in the summary plan description).

See 29 C.F.R. § 2550.404a-5(c)(1)(i)(A)-(B)-(F), -5(c)(2)-(4) https://www.ecfr.gov/current/title-29/part-2550/section-2550.404a-5#p-2550.404a-5(c).

Or, if the truth is that the plan’s administrator never delivered a 404a-5 disclosure, the administrator might tell the new platform that truth.

A service change might be an opportunity for a plan’s administrator to begin a disclosure.

This is not advice to anyone.

[Paul I]

@Peter Gulia highlights that a plan with all brokerage accounts doesn't have designated investment alternatives so the table of financial information in the 404(a)(5) notice is not applicable, but any fees chargeable to a participant's account (e.g., admin fees, distribution fees, brokerage account fees...) remain disclosable on the notice.

There is no explicit penalty for a failure to issue the 404(a)(5) notice, BUT the DOL can deem the failure to be a breach of fiduciary responsibility by the plan fiduciaries.  (No fiduciary wants to be in that position.)

Send out the notice ASAP once the decision is made confirming the new investment menu, and disclose any fees payable from a participant's account.  This will demonstrate good faith compliance going forward and likely would placate a DOL investigator.