Friday, July 29, 2011
The Department of Labor has given business owners who sponsor 401(k) plans until next June to demonstrate that the plan used is the best deal possible. Business owners must also itemize the money their employees pay to third-party service providers.
The Department pushed back the effective date for these new rules (originally set for July 16) to April 1, 2012. Vendors and employers have sixty additional days after the start date to roll out their new account statements.
Penalties for failing to itemize fees range from 15% of the plan’s assets to 100% if it takes the company longer than the current calendar year to fix the problem. The plan sponsors must personally pay for any penalties.
See Scott Martin, DOL Begins Crackdown on 401(k) Providers for Fee Bundling Abuses, The Trust Advisor Blog, Jul. 24, 2011.