New Retirement Plan Rules & Regulations Kicking In

The Labor Department has finally decided to increase disclosure requirements by retirement plan service providers regarding compensation arrangements and other potential conflicts of interest. In a nutshell, service providers of all types will be required by DOL regulation 408(b)(2) to have a written agreement which clearly elaborates on the various compensation arrangements within the plan which ultimately get paid by plan participants. The way it currently works, most investors in defined-contribution plans (401k & 403b) don’t have a clue about how, where, and when they pay the sum of these fees which often total up to 5% per year. The new regulations also apply to defined-benefit plans, but for the purpose of this article I’m primarily concerned with 401k and 403b (defined-contribution) plans. I’ve also touched below on some of the specifics of the desperately needed 403b regulations which will likely take affect next month.

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