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Updated Primer on Defined Contribution Fee Disclosure
June 25, 2007
AFP Staff Writers
Recognizing that clear and understandable information about defined contribution plan fees are vital to employees in these plans, the Committee on Investment of Employee Benefit Assets of the Association for Financial Professionals (CIEBA of AFP) today released an updated version of its primer on "Defined Contribution Fee Disclosure Best Practices."
The revised primer provides a framework for plan sponsors to use as they evaluate effective ways to disclose fees to plan participants. The primer outlines principles on fee disclosure, general guidelines and investment-specific information for sponsors to consider when developing fee disclosure materials for 401(k) or other types of defined contribution plans. The booklet also contains sample disclosure statements for different types of plan services and/or investments.
Employee Retirement Income Security Act (ERISA) fiduciaries must make decisions in the best interest of plan participants, and ensure that the costs associated with defined contribution plans are both appropriate and reasonable. Good disclosure about the costs and fees associated with defined contribution plans is especially important, since employees’ retirement security is dependent on how much a participant saves, how contributions are invested and the performance of these investments. (net of costs). In light of this, "Defined Contribution Fee Disclosure Best Practices" was developed by CIEBA members as a practical guide for use by plan sponsors. Collectively, CIEBA members manage $511 billion in defined contribution plan assets on behalf of 5.5 million plan participants.
Copies of the updated primer Defined Contribution Fee Disclosure Best Practices is available at: http://www.afponline.org/pub/cieba/primer/ciebaprimers.html.
Copyright © 2007 Association for Financial Professionals. All Rights Reserved.
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