Review Your Fee Disclosure to Reduce Liability
Unlike ERISA rules enforced by fines. fee disclosure rules address fiduciary duty. So noncompliance can result in professional and personal liability.
To reduce risk sponsors must determine 408(b)2 and 404(a)5 disclosures to be accurate, fees are reasonable, and required information is properly communicated to participants, beneficiaries and non-participating employees.
DOL audits are on the rise. Yet some sponsors have not acted—perhaps bogged down by difficult to read, hard to understand disclosures that challenge even the most financially literate employers.
What should sponsors do?
Invite their retirement advisor or a retirement plan specialist to walk them through their fee disclosure. In addition, fee reasonableness can be assessed using third-party benchmarks and/or competitive bids from reputable plan providers.
If fees are found to be unreasonable or higher than necessary it may be time to switch plan providers. Bear in mind that participants usually pay the lion’s share of fees.
If you are not getting ideas like this from your provider, it may be time for a review.