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401(k) Fee Disclosure Rules

A review of the 2012 federal 401(k) fee disclosure regulations
by Chemical Bank on 6 August 2014

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Transcript of 401(k) Fee Disclosure Rules

New 401(k) Fee
Disclosure Rules
What do they mean for business owners?
Presented by
WHY WHEN WHO WHAT
Updates to the Employee Retirement Income Security Act of 1974 (ERISA)
Department of Labor’s Employee Benefits Security Administration (EBSA)
Effective Summer 2012
Help employers compare costs between different plan providers and help America's workers better manage and invest the money they contribute to their 401(k) type retirement accounts
WHY?
7 out of 10 people believe there are
no
fees associated with their 401(K)
&
The cumulative effects of fees and expenses on retirement savings can be substantial
GOALS
New level of fee and expense
transparency

Workers have
access
to the information they need to make informed decisions

Investment-related information is delivered in a
meaningful
way

Employers will be able to make ‘apples to apples’
comparisons
across plans
SUMMARY
Plan fiduciaries must act prudently and solely in the interest of the plan’s participants and beneficiaries
A plan fiduciary is the employer -- also called the plan provider or plan administrator
A fiduciary is a legal or ethical relationship of confidence or trust between two or more parties
fi·du·ci·ar·y:
SUMMARY
Plan administrators must take steps to ensure that participants and beneficiaries are:

Aware of their rights and responsibilities with respect to their assets in the plan

Provided
sufficient

information
regarding the plan and the plan’s investment options on a regular and periodic basis
of the New Regulations
Information
Plan Administrators must provide participants the following on or before the date they can first direct their investments and annually thereafter:

General Plan Overview
Administrative Expenses
Individual Expenses

Participants must receive at the least quarterly statements showing the dollar amount of the plan-related fees and expenses actually deducted from their accounts and a description of the services rendered for that charge
Plan
Investment
Information
Plan Administrators must provide participants the following investment-related information on or before the date they can first direct their investments and annually thereafter:

Performance Data
Benchmark Data
Fee and Expense Information
Internet Websites
Glossary

It also must be furnished in a chart or similar format designed to facilitate a comparison of investment options available under the plan.
What does this mean for
BUSINESS
OWNERS?
Plan providers must know:

The fees that are involved with their plan
If those fees are reasonable for the services provided
IMPORTANT STEPS
For Business Owners
Understand
ALL
the options -- know current plan and explore other plans that are available

Ensure plan provider’s fees and expenses are reasonable

Participant fee disclosures are shared with employees

Continuously monitor plan and plan performance
WHY ?
Because...
The plan administrator is legally
responsible for offering their
employees the most affordable
retirement planning option that
is consistent with the employees needs and goals
OVERVIEW
IMPORTANT
DATES
July 1
Service providers must send disclosures to plan providers
August 30
Plan providers must provide initial plan-level and investment-level disclosures to participants
November 14
By this date, quarterly statements with plan expenses for the previous quarter must be furnished to plan participants and quarterly thereafter
WE CAN
HELP
Our Employee Benefits team has the
expertise
and
experience
to:

Explain and navigate the new regulations

Explain various plan and investment options and determine whether the fees charged are appropriate

Offer a competitive quote for 401(k) services
CONTACT US
Rudy Radosa
Vice President | Employee Benefits Officer
989.839.5481 | Rudy.Radosa@ChemicalBankMI.com
Herb Hardy
Vice President | Employee Benefits Officer
989.839.5331 | Herb.Hardy@ChemicalBankMI.com
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