Be informed about new 401K disclosure rules for 2012

In October of last year the Department of Labor issued new regulations and responsibilities regarding the disclosure of retirement-plan fees and investment related information for employees. Falling under the umbrella of the Employee Retirement Income Security Act of 1974, or ERISA, these new rules enforce a greater transparency for workers, affording them the opportunity to gauge whether plan fees are reasonable. Additionally all information on 401(k) plans must be given to both the plan participants, as well as their beneficiaries.

These new rules require anyone who has discretion over plan management to certain minimum standards requiring them to (1):

  1. Act for the exclusive benefit of participants and beneficiaries;
  2. Pay only reasonable plan expenses;
  3. Carry out their duties prudently;
  4. Diversify plan investments;
  5. And adhere to the terms of the plan’s documents.

Some of the new responsibilities will include (2):

  • Providing employees with quarterly statements detailing plan fees and expenses that have been deducted from their accounts as well as information regarding the costs of investments available in their plan.
  • Presenting information in a clear and easy to understand format.
  • Disclosing expense and return information in order to achieve uniformity across the spectrum of investments that exist in plans.
  • Providing specific information regarding investments in target date funds.
  • And giving employees access to supplemental investment information.

It is crucial that CFO’s and Financial Managers are aware of these new rules because under the new regulations – they can be held personally liable should they fail to comply. For more information on this topic, visit

(1) New 401(k) Obligations Heaped on CFOs, John Martini,
(2) New 401(k) disclosure rules coming, but not until 2012, Don Mecoy,