OUR THOUGHTS ON:

401(k) Fee Disclosure Is Long Overdue

Wealth Management

By Karl Kunkle

On May 18, 2010, Putnam Investments became one of the first national providers to announce what it termed a “revolutionary” new 401(k) platform that fully discloses all fees associated with its 401(k) product. The platform discloses investment management, servicing and recordkeeping fees in addition to revenue-sharing figures associated with the funds on its platform. The disclosure information is available in both basis point presentation and in hard dollar terms. Marcia Wagner, ERISA attorney at the Wagner Law Group, was “surprised and impressed” by the demo of the platform and deemed it a “highly favorable development” for the vendor community. Many national vendors believe sees that such transparent communication will soon be required at the participant level. In fact, much of this information is required to be included in 2009 plan year form 5500 filings with a due date of July 31, 2010.

We believe that such transparency in fee disclosure is long overdue. Such a requirement will level the playing field and go a long way toward assisting plan sponsors in evaluating the cost/benefit of 401(K) platforms. Currently, there are many platforms with high hidden fees and service models that lack personal attention at the both the participant and plan sponsor level.

What is interesting is that this development is far from revolutionary since the SD AdvantageTM open architecture 401(k) platform, which we sponsor, has utilized such transparent disclosure since 2006. In fact, we make such disclosure a specific discussion point in each of our fiduciary review meetings with the investment committees of our plan sponsor clients. We also benchmark such fees against plans of comparable size.

Contact Karl W. Kunkle or Jeff A. Acheson to learn more about the SD AdvantageTM open architecture 401(k) platform and service model. It has long provided full fee transparency, nonproprietary fund choice, no commissions and a personal approach to service with a goal toward results-oriented participant retirement savings and employer fiduciary protection.

Schneider Downs provides accounting, tax, wealth management and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA, and Columbus, OH

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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