Labor Department, SEC coordinate on participant 401(k) fee disclosures

The Labor Department and the SEC have agreed that if fee disclosures to employees on their retirement plan investment options meet the DOL's requirements, then they also satisfy the SEC's advertising rules. The Securities and Exchange Commission yesterday sent a no-action letter to the Labor Department indicating as much. The agencies' agreement centers on a fee disclosure mandate from the DOL that would require plan sponsors to give employees a breakdown of the returns, benchmarks and fees of the investments in their 401(k)s. Plans will be required to provide the first set of disclosures tied to this regulation by May 31, 2012. Though the rule was written to apply to plan sponsors and service providers, record keepers and fund managers are more likely to be the ones who disseminate that information to employees. Those providers already have to reckon with the SEC's regulations on advertising as applicable to 401(k) plan investments, including an amendment that would call for extra details on target-date funds. The agreement recognizes that disclosures that already meet the Labor Department's requirements are also in compliance with the SEC's advertising rules. “This ultimately will reduce the cost of regulatory compliance for these plans,” said Assistant Labor Phyllis Borzi, who heads the Employee Benefits Security Administration.