The legislation mandates that plan participants receive an enrollment notice upfront and a quarterly notice updating them on their account, according to Dow Jones Newswires. The legislation would require disclosure of the plans’ risk/return characteristics, historic rates of return in comparison to a benchmark, and whether plan providers would receive payments from a third party in connection with providing services to the plan, among other provisions.
In addition, the bill dictates that plan providers unbundle fees or list the fees individually.
In a statement to his House colleagues, Neal said that while more disclosure is necessary, it is more important for the information to be provided in a format that’s “easily digestible” and “in plain English” for plan participants, according to Dow Jones.
Neal introduced similar 401(k) fee disclosure legislation in the previous Congress, as did House Education and Labor Committee Chairman George Miller (D-California) along with Representative Robert Andrews (D-New Jersey) (see “Testifiers Debate Merits of Fee Disclosure“).
Comparable legislation has also been introduced in the Senate by Tom Harkin (D-Iowa) (see “Senators Introduce 401(k) Fee Disclosure Legislation“).