Navigating the new retirement plan fee disclosure regulations

January 20, 2012

By David Chrestensen| Cincinnati Business Courier | January 20, 2012

CINCINNATI | The New Year brings new opportunities for business owners to review their company's strategic financial plan and goals. One area you will want to pay close attention to this year is your business's retirement plan program. The Department of Labor is implementing new fee disclosure requirements in 2012 and it's important that your company is prepared. Understand the changes and learn the action steps you need to take to get the most out of your company's program.

The Department of Labor's new regulations that require action in 2012:

Service provider fee disclosure 408 (b) (2): Starting July 1, 2012, a new retirement plan fee disclosure rule mandated by the Employee Retirement Income Security Act (ERISA) requires service providers to fully disclose to the plan sponsor certain information on fees, compensation and services provided to the plan.

Participant fee disclosure 404 (a): Additionally on August 31, 2012, new participant fee rules from the Department of Labor will go into effect requiring business owners to communicate administrative, individual and investment-related expenses associated with a participant directed retirement plan to eligible employees, plan participants and beneficiaries. At first glance, these changes may seem complex. If you're unsure of how to manage the new regulations and communicate them to your employees, you're not alone. In fact, a recent survey found that 61 percent of business owners do not feel prepared for these new fee disclosure requirements.

New opportunity and benefits:

The good news is that these changes offer many benefits and will create a consistent standard across the industry. Business owners usually have a substantial personal share in their company's retirement plan. You now have the opportunity to compare options and find a retirement program that best suits the needs of your company, your employees and you. With these changes comes greater potential to improve your return on investment and lower expenses.

The transparent pricing model allows you to evaluate multiple service providers and gain a clear understanding of the service fees that you can expect to pay over the life of the contract. For the first time, companies will receive investment product information for comparison shopping. You and your employees will also receive quarterly statements showing the fees deducted from your accounts.

Important action steps for business owners:

When considering yoru company's retirement benefit program, there are a few key steps that will help you stay on track and work toward complying with the new regulations.

1. Understand all your options. Meet with multiple service providers to go over your company's goals and retirement benefit program.

2. Select your plan provider and make sure the fees are reasonable based on your goals.

3. Share plan features with employees. It is critical that you provide a full plan description to employees, including fees and information they need to make informed investment decisions. Schedule regular meetings to provide updated information and educational tools as needed.

4. Monitor the plan and performance. Meet with your financial partner quarterly or annually to review your plan and make sure it continues to meet your needs.

As you continue to position your company for success this year, work closely with a financial partner who can help you navigate the new regulations, understand all your options and provide you smart tools to effectively educate and communicate with employees. At First Financial Wealth Management, we've always operated with transparency. Our clients count on us for consisten, high-quality service and can feel confident knowing we've provided them with the full scope of informaiton regarding the features of their plan and fees. We look forward to working with you every step of the way as you seek to ensure your business complies with the new ERISA regulations.

For more information about retirement plan services, contact David Chrestensen with First Financial Wealth Management, a division of First Financial Bank. Call 513-603-4049 or e-mail

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