Fee Disclosure for the People

By Yariel Chiong

While “fee disclosure” is currently not mandated by government, Chairman of the Committee on Education and Labor, Senator George Miller has been one strong advocate fighting to bring fee disclosure back into the H.R. 4213 bill. The disclosure which was based on the “401(k) Fair Disclosure and Pension Security Act” authored by Senator Miller was included in the May 28, 2010 version approved by the House of Representatives. But as of June 8, 2010, the bill has been stripped of the fee disclosure in the Senate’s version. The 401(k) fee disclosure would have informed plan participants of fees being charged to them by service providers. This fee disclosure will most likely not make it back into the bill.

The reason for the Senate’s exclusion of the provision is because they feel they will derail the Department of Labor’s (DOL) own fee disclosure efforts proposed by regulation 408(b)(2) which will mandate service providers to disclose compensation to plan sponsors once passed.

ACI discloses its fees to plan sponsors. As part of our pro-active company culture we updated our engagement letters over 2 years ago to adhere to the DOL’s proposed regulation on fee disclosure.

Some of the things clients can expect from ACI:

1. Fee transparency allows them to see where their money is going
2. An ethical company which charges fairly for their services
3. We share revenue received from vendors with our clients sometimes covering all of our cost to the client
4. An experienced staff with an average of over 15 years of experience

ACI is on the client’s side. We pride ourselves on being on the forefront of fee disclosure from service providers and will continue to provide you with information on the proposed H.R. 4213 bill and 408(b)(2) regulation.

Contact us if you would like more information on fee disclosure.

IRS Questionnaire Update

By Yariel Chiong

We recently contacted our clients and advisors to let them know that the IRS is conducting a random Compliance Check of 1,200 401(k) Plans. Plan Sponsors who received the questionnaire have 90 days (without) extension to complete and return it. Not completing the questionnaire automatically will result in an IRS audit.

Plan Sponsors should make sure to provide complete and factual answers to the detailed questions regarding their 401(k) plans. Not understanding, or partially answering questions may result in costly enforcement by the IRS. Immediately contact your ACI administrator who can help you answer these questions on a time and charges basis.

The purpose of the IRS questionnaire is to determine the following:

1. Potential compliance issues
2. Any operational Issues
3. Additional education and outreach guidance that may be helpful for the IRS to provide plan sponsors to improve compliance

NOTE: Some multiple question answers provided are unacceptable under the law and will lead to an IRS audit. There are also similar questions repeated throughout the questionnaire, and plan sponsors should be aware of the relationship between the questions. Be careful not to inadvertently answer a question which is legally unacceptable unless it is factually the correct answer.

If you have received a questionnaire contact your plan administrator with the compliance questions. We will answer these questions for you.