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Fee Disclosure

Participant Fee Disclosure DOL Regulation 404a-5

The Department of Labor has issued regulations indicating that it is part of the plan administrator's responsibilities to make certain participant disclosures mandatory for all participant-directed defined contributions plans. The purpose is to enable participants to make informed decisions regarding the investment of their account assets.

Plan sponsors are required to provide both plan-related and investment-related information to all eligible employees which includes all (i) employees who are eligible to participate under the terms of the plan, regardless of whether the employee has actually enrolled in the plan, and (ii) beneficiaries with the right to direct investments in the plan.

The new regulations are now in effect and required that the plan administrator provide: (1) annual and quarterly information on administrative and individual expenses; (2) a comparative chart on plan investments, including benchmarks; (3) web sites for plan investments; (4) information regarding any brokerage accounts; and (5) certain statements regarding plan investments.

A plan with a brokerage account option is not exempt from either the annual or quarterly expense disclosure requirements. The Plan Administrator would therefor have to disclose the fees and expenses the plan would charge. This would include fees that may arise from the operation of the brokerage account.