DoL Guidance Raises Concerns of Offering Self Directed Brokerage Options in 401(k) Plans
On August 30, 2012, all defined contribution plan sponsors must provide fee and expense information to their plan’s participants nut he new participant␣-level fee disclosures required by ERISA 404(a)(5). To clarify plan sponsors’ obligations, the United States Department of Labor (DoL) recently issued Field Assistance Bulletin (FAB) 2012-02, which provides question-and-answer guidance. Possibly the biggest red flag in the FAB is the disclosure requirement for plans that offer brokerage windows and self-directed brokerage account options to plan participants and beneficiaries. All plan sponsors who currently offer a brokerage account option or who are considering offering one should immediately consider the impact of the FAB on their fiduciary obligations and act accordingly.