Retirement Plan Fees

The American government is currently working hard to solve the lots of issues related to retirement plans and their regulations.

One of the issues being worked upon is fee disclosures to participants as well as plan sponsors. Many were expecting a regulation for the 408b plans that requires the plan provider to disclose all the fees for the sponsors. This however has not been established yet. The issue is still to be tackled well and something is still expected as regards this matter.
In fact, the two congress houses wish for a proper legislation governing fee disclosure. The Special Committee on Aging has presented the Defined Contribution Fee Disclosure Act 2009. This act would compel plan sponsors of defined contribution plans, to disclose the entire plan fees to the participants.

This legislation should make it easier for plan sponsors to negotiate fees with their participants. Participants on the other hand would be in a better position since they will know exactly what the cost of their plan is.

Of the entire proposed legislation package, the only part that did not come to the final stage was the changes to Section C of the Form 5500. If a plan has at least 100 participants, the plan needs to report implicit returns. The thing is that plan sponsors are having a hard time getting this information, in the case that his service provider did not provide it. This is still a bit of a gray area, where lot of time is used up in filling in this form, without any significant end result.

As for the advisors, it is believed that these new regulations that will stiffen the environment may encourage a trend in the industry. This trend assumes that with tightened regulations retirement plan advisors will shift to being fee-based.

Reference: http://www.planadviser.com/magazine/article.php/4242