What Is a Fee Disclosure Statement
Note: Employer-based plans are not required to provide this disclosure. For example, if the disclosure of the 2014 renewal fee was submitted on November 1, 2014, the 401(k) plan has the option of providing its 2015 renewal fee return on November 1, 2015, or if the plan administrator determines that it would be beneficial for members and beneficiaries to provide disclosure of the annual fee later with further notices to members distributed on December 1. In 2015, the deferred distribution will be in line with the more flexible “14-month” rule. The Ministry of Labour has published rules for disclosing member fees for member-based plans, which first came into effect in 2012. These fee details are designed to help participants understand how much they pay to manage their 401(k) plan. They contain both plan-related and investment information. If you count yourself among those 401(k) plan sponsors, I have good news – your role in delivering messages from members should be fundamental. That`s because a qualified 401(k) supplier does the heavy lifting in preparing all the disclosures that apply to your plan. You just need to make sure that everyone is distributed in a timely manner using an acceptable method. Typically, this responsibility can be easily managed using a 401(k) admin checklist. Required disclosures must be provided to all employees eligible for the Plan, including new employees and employees who are eligible but have not elected to participate in the Plan.
A plan sponsor should work with the plan`s 401(k) vendor to prepare the required disclosures. However, the plan sponsor may wish to have the fee disclosures reviewed by a lawyer to confirm that they meet all the requirements. If any of the disclosure information on participation fees to be disclosed in the annual notice changes, each member (including eligible employees who choose not to participate in the plan) and each beneficiary must receive a description of the change at least 30 days, but not more than 90 days, before the effective date of the change. The definition of “each year thereafter” has changed several times as the Ministry of Labour has taken into account the practical issues related to disclosure. The first annual disclosure had to be made by the 30th at the latest. August 2012, which would have made the annual disclosure of a plan for 2013 due no later than 12 months after the date of the 2012 disclosure. However, the Ministry of Labour recognized the need for companies to adjust their disclosure timeline to match the timing of other year-end disclosures and announced the option to make a single deadline to provide the 2013 or 2014 disclosure, provided that the delayed disclosure did not occur more than 18 months after the previous year`s disclosure. To provide even more flexibility in the timing of disclosure of annual fees, the Ministry of Labour has published guidelines (effective June 17, 2015) that define “annually thereafter” that future annual fee disclosures must be provided at least once in a 14-month period (rather than once in every 12-month period). regardless of whether the plan operates on a calendar or fiscal year basis.
A condition for exercising this flexibility is that the plan manager must reasonably determine that the use of the extended time period benefits members and beneficiaries. The notice of disclosure of the plan sponsor`s annual fee to members must include certain information about the plans and investments related to the fees, including: Each year, Paychex monitors thousands of changes in local, state and federal laws that affect our more than 550,000 U.S. business clients. You can be sure that we will continue to take care of the administrative details – so you can focus on running your business. To keep our clients in compliance with the Fee Disclosure Policy, Paychex offers: There is also an annual fee disclosure of amounts that may be charged to a participant account. This annual information includes, in the form of a comparative graph, certain information on the investment options provided for in the plan. The overall objective of this disclosure is to ensure that members and beneficiaries of individual member-led account plans receive the information they need to make informed decisions about managing their individual accounts and investing their retirement savings on a regular basis. That information shall be provided by the date on which a participant can make direct investments for the first time and at least once a year thereafter. The U.S.
The Disclosure of DOL Fees Regulations (ERISA 404(a)) require each plan sponsor to disclose general plan information, plan fee information, individual fee information, and investment information no later than the date a member or beneficiary can direct their investments for the first time and annually thereafter. . . .