A learning experience for all, Retirement Plan Fee Disclosure

“The facts are coming! The facts are coming!” shouts the government official on a “White Horse” riding from Washington to everywhere.

Sections 408(b)2 and 405(c)4 of the Internal Revenue code detail the last action steps in the pension reform movement that has impacted the 401(k) world and shaken up the 403(b) world. Between them, they detail:

  1. the format and content for service providers telling retirement plan sponsors what their costs are, by service category,
  2. the requirements for Plan Sponsors to advise their plan participants of those costs that impact them, and finally
  3. the format and content to be included in quarterly statements to those same participants beginning with the Third Quarter statements, in 2012. (Read, September, 2012.)

So who is paying attention to these new fee disclosure requirements? Everyone should and many are not. Admittedly, the retirement plan administrator can file the report they will receive from their service provider, Envoy for example, under “later.” If “later” also includes not providing the required information to “all existing and eligible” plan participants by the end of August 2012, big problems will arise.

High on the list of “bads” for a ministry leader is being “blindsided” by a problem that could (should) have been foreseen and handled before it became a problem. All those with retirement plan responsibility, will want to make sure all ministry leadership is aware of what is happening before they get blindsided. The crash will surely take place when the “disclosure fees” hit the participant statements in the fall. Forewarned is forearmed.

Here is one possible issue that impacts churches. These disclosure requirements are not mandatory for Church Plans. Rather than getting into the “why not,” Best Practices certainly indicates following the fee disclosure path. Envoy is providing the same disclosure information to our Church Plan Sponsors and participants as is being provided to all the other categories, often described as being “under ERISA regulations.” If you are a board member or ministry leader with a Church Plan, and do not get this information from your vendor, it will be time to ask some serious questions like, “Where is my fee disclosure information?” Embracing transparency is the new reality!

A real-life observation is that “Knowledge is Power.” Knowing the facts about any life situation allows us to make better, informed, and hopefully wiser decisions. This is true whether we are talking about the reality of a relationship or the facts about our retirement plan. In the fiduciary role that many of you have regarding your organization’s retirement plan, you are about to be thrust into a new learning experience. My advice: “Embrace the Change,” “Seize the Day,” set up a Retirement Plan Oversight Committee and begin to Engage. You’ll be pleasantly surprised with the valuable results.

Your thoughts and comments are expected and appreciated.

Sharing Trusted Advice Together, Along The Way.

Bruce Bruinsma