408(b)(2) Regs and Your 401(k)

The Department of Labor’s Employee Benefits Security Administration recently released the final rule to help Americans invest and manage money in 401(k) plans with additional clarity. Many experts are referring to the new regulations as the Fee Disclosure Rules or simply 408(b)(2). The overall idea is to provide plan sponsors (employers) and plan participants (employees) in retirement plans transparency in the form of plan information, conflicts of interest, mutual fund expenses, and other fees that may apply. Among other things, the final rules reinforce the fact that plan sponsors are fiduciaries for their employees and are held to the highest standards of prudence. The new regulations go into effect on July 1, 2012 with plan sponsors (employers) required to provide the Fee Disclosure Statement within 60 days –  August 30.

These new regulations will have only a small effect on most Registered Investment Advisors that work on a fiduciary, fee-only basis. However, they will greatly affect commissioned based advisors offering 401(k) plans who are not working as a fiduciary. Employers offering 401(k)s will seriously have to consider if it makes sense to work with an advisor that is not acting as a fiduciary and carefully review the conflict of interest that commissioned advisors present. With the upcoming new regulations, now is a good time for small businesses to review their retirement plans to make sure they are aware of any conflicts of interest, review the reasonableness of fund fees and administration fees, assess if the advisor they are working with is a fiduciary, and review all documents with an experienced ERISA attorney.

Kevin McNab

This article is written by Kevin J. McNab. Kevin is President of ACE Wealth Partners, LLC and is a CFP®, ChFC®, and CRPC®. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by ACE Wealth Partners, LLC unless a client service agreement is in place. If you have any questions regarding this Blog Post, please Contact Us. Please read our website DISCLOSURE carefully for additional information.