SEC Addresses Concerns about Participant-Level Fee Disclosure

The SEC letter states that information required by and that complies with the fee disclosure regulation that is provided by a plan administrator, or designee, to plan participants, or beneficiaries will be treated as a communication that satisfies the requirements of Rule 482.  The letter’s intent is to resolve concerns about potential differences between the department’s participant disclosure requirements and the SEC rules on advertising that may apply to plan investment options.  

“This no-action letter is significant for many reasons, but primarily because it will help 401(k) plans and service providers understand what is expected of them under the Employee Retirement Income Security Act and the advertising rules under securities law,” said Phyllis C. Borzi, EBSA Assistant Secretary. “This ultimately will reduce the cost of regulatory compliance for these plans, which will benefit America’s workers. This letter exemplifies the close and sustained coordination between our agency and the SEC, not only on this letter, but on many other matters affecting retirement plans and their financial service providers.”  

On October 20, 2010, EBSA published the participant-level fee disclosure regulation (see "EBSA Releases Final Participant Fee Disclosure Rule"). It requires many retirement savings plans to disclose information about the plan’s investment choices. This includes fee and performance information, which must be provided to participants and beneficiaries in cases where they have the ability to direct the investment of their individual accounts. Most plans will be required to furnish the first set of disclosures under this regulation by May 31, 2012.  

EBSA and SEC staff have been coordinating on the no-action letter since pre-publication of the final rule in 2010 to address concerns raised by plan representatives and their financial service providers regarding their obligations under ERISA and Rule 482.