Client and Participant Fee Disclosure Statement Regulations

Updated 1/15/2013

Client Fee Disclosure Regulations

The U.S. DOL Fee Disclosure Rules (ERISA 408(b)(2)) require covered service providers, such as Paychex, to disclose all fees associated with qualified retirement plans to clients and enable the plan fiduciary to make informed decisions about the services, costs, and the service provider.

Under these rules, plan sponsors must receive the following:

  • A written description of the services being provided;
  • Detailed documentation of direct and indirect compensation to be received;
  • Disclosure as to whether the provider is providing fiduciary services; and
  • Information about plan investments and options.

The deadline for service providers to comply with these requirements was July 1, 2012.

Participant Fee Disclosure Regulations

The U.S. DOL Participant Fee Disclosure Regulation (ERISA 404(a)) requires each plan sponsor to provide disclosures of general plan information, plan fee information, individual fee information, and investment-related information on or before the date a participant or beneficiary can first direct his or her investments, and annually thereafter.

All employees who participate in a retirement plan where the participants have any control over the direction of their funds (known as a participant-directed plan) must receive a document from their employer that discloses any fees that are or can be charged to the participant. These fees can include general plan-related fees, individual fees, and investment-related fees. The employer must provide the participant with this document before the employee is eligible to direct his or her first investments, and then once annually thereafter. The participant must also receive a statement every quarter that details any fees charged during that time.

This regulation covers the following plans:

  • 401(k)
  • Profit sharing
  • Money purchase
  • SIMPLE 401(k)
  • ERISA 403(b) plans

Note: Employer-directed plans are not required to provide this disclosure.

This regulation does not cover the following plans:

  • Individual Retirement Accounts (IRAs)
  • Government plans
  • Simplified employee pensions (SEPs)
  • SIMPLE IRAs

The deadline for plan sponsors to comply with these requirements was August 30, 2012.

Are You Ready for What's Next?

Every year, Paychex monitors thousands of changes in local, state, and federal laws that affect our more than 550,000 U.S. business clients. You can be assured that we will continue to take care of the administrative details — so you can focus on running your business. To keep our clients in compliance with fee disclosure regulations, Paychex provides:

  • Fee disclosure statements ahead of DOL deadlines;
  • Automatic updates to statements when changes have been made;
  • Electronic statements to clients, participants, and investment advisors; and
  • Dedicated online and phone support for clients, participants, and advisors.

Any information provided by this website may no longer be viable subsequent to its issuance. Any information it provides is developed at the time of its issuance based upon facts and circumstances known at that time.

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