Changes to the Employee Retirement Income Security Act of 1974 (ERISA) mean that soon, sponsors of 401(k) and other retirement plans will have some new responsibilities. There are new requirements to disclose fees and compensation paid in connection with these retirement plans.

The changes, which take effect July 1, 2012, are big. As a plan sponsor, you will receive new information about fees paid by the plan. You will also need to give participants some new information. While the new fee disclosure rules will add some new responsibilities for you, there is good reason to support them. You have the fiduciary duty to make decisions about which providers are the best value for your plan. To do that, you also need to understand the fees.

Your Role As Fiduciary

It is important that you understand your role as a plan fiduciary. ERISA assigns certain duties to plan fiduciaries, and you must carry them out thoughtfully and diligently. If you don’t, your inaction may result in serious consequences, to you personally and to the plan.

It’s also important to note that you can be a fiduciary whether or not you are named as one. If you are making decisions about the plan’s operations, you are a fiduciary and have all the associated responsibilities.

The overriding rule is that plan fiduciaries are required to act prudently, and solely in the best interests of the plan’s participants and beneficiaries. Failure to do so has serious consequences. Plan fiduciaries may be held personally liable for breaching their duties. This means that your personal assets are at risk, and you could even face jail time if you are found guilty of violating your fiduciary duty.

Having well-thought-out procedures in place – and following them – is one of the best ways to prove your intentions to act in the best interests of the participants.

How Can You Prepare?

You may be surprised to learn that the vast majority of participants believe their plan is free. When they learn that they are indeed paying to invest in the retirement plan, participants may react negatively. However, you may be able to avoid some of these negative reactions by arming yourself with information and taking a strategic approach to your communications.

While these changes are some of the most extensive since ERISA was first enacted, they need not be overwhelming. BLR’s New 401(k) Fee Disclosure Compliance Download Report--is designed to help you with the changes. Inside, you’ll find the information you need in order to meet your fee disclosure responsibilities as a plan sponsor and plan fiduciary. You’ll also receive guidance in communicating new information to plan participants. Not only will we help you make the new disclosures required by ERISA, we will help you apply some communication strategies that may take some of the sting out of the news. While the Department of Labor has issued sample disclosures, many participants will likely find them confusing. That’s why this book focuses on communication, rather than simply disclosure.