Dalbar - CFO 401(k) Buyers Guide

The Department of Labor has proposed significant new requirements for all 401(k) plans.

Under the proposed regulations all providers of services and advisers must make written disclosures to employers:

Prior to engaging the provider or adviser
Whenever the engagement is extended or renewed

The written disclosures consist of:

A description of all services being provided
Details of all compensation, direct & indirect
How compensation is calculated and terminated
Form(s) of payment
Whether the provider or adviser is acting as a fiduciary
Financial or other interests that could be in conflict
Other relationships that could be in conflict
Ability of provider or adviser to affect its own compensation
Provider’s or adviser’s policies that address conflicts of interest
A statement that provider or adviser agrees to report material changes
A statement that provider or adviser will supply information required for regulatory reporting (such as Form 5500)
Ongoing obligation to make specified disclosures

Action:

Ask all service providers and advisers for the disclosures required under this proposal. See Standard Fee Disclosure for an example or contact Dalbar.

In addition to these disclosure requirements, the Department of Labor has revised its annual reporting (Form 5500) to include each type of compensation that a provider or adviser receives and the specific service that is being compensated.

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