A “covered service provider” (CSP) – such as a record keeper or investment broker/advisor – must provide the fiduciary responsible for a qualified retirement plan with the information he/she needs to (a) assess the reasonableness of the total compensation received by the CSP, (b) identify any potential conflicts of interest, and (c) satisfy the reporting and disclosure requirements under Title I of ERISA. Otherwise, this compensation may be judged a prohibited transaction – subjecting the fiduciary, as well as the CSP, to excise tax penalties.
For the complete regulations as published in the Federal Register, please click here.
The ERISA fiduciary responsible for the 401(k) or other qualified retirement plan must make mandated disclosures of investment-related information, including expenses and fees, to participants to help better manage retirement savings. Failure to comply could result in the fiduciary being held liable for monetary damages for losses that could have been avoided with proper disclosure.
For the complete regulations as published by the Department of Labor, click here.
Source: Adapted from “Fiduciary Focus: New U.S. Department of Labor Retirement Plan Disclosure Regulations”, a White Paper from Ridgeworth Investments, October 2001, ridgeworth.com