Participant-Level Fee Disclosures

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on July 11, 2023

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Definition of Participant-Level Fee Disclosures

Participant-Level Fee Disclosures are regulatory requirements aimed at promoting transparency in the fees and expenses charged to participants in employer-sponsored retirement plans such as 401(k), 403(b), and similar defined contribution plans.

These disclosures are governed by the Employee Retirement Income Security Act (ERISA) and the U.S. Department of Labor (DOL) regulations, primarily Section 404(a)(5) of ERISA.

The purpose of these disclosures is to help plan participants make informed decisions about their investment options and better understand the costs associated with their retirement savings.

Types of Participant-Level Fee Disclosures

Types of Participant-Level Fee Disclosures

Investment-Related Fees

Expense Ratios

Expense ratios represent the percentage of a mutual fund's or exchange-traded fund's (ETF) assets used for operational expenses. These fees are automatically deducted from the fund's returns, affecting the overall investment performance.

Sales Charges

Sales charges, also known as loads, are fees paid by investors when purchasing or selling shares of mutual funds. These fees compensate brokers, financial advisors, or other intermediaries for their services.

Management Fees

Management fees are charged by the investment management company to cover the costs of managing the fund, including investment research, portfolio management, and trading expenses.

Plan Administration Fees

Recordkeeping Fees

Recordkeeping fees cover the cost of maintaining participant account records, processing transactions, and providing customer service.

Custodial Fees

Custodial fees are charged by the financial institution holding the plan's assets to cover the costs of safeguarding the investments and executing transactions.

Third-Party Administration Fees

Third-party administration (TPA) fees are paid to service providers who help manage the plan's day-to-day operations, such as compliance testing and government reporting.

Individual Service Fees

Loan Processing Fees

Loan processing fees are charged when participants take loans from their retirement plan accounts. These fees cover the administrative costs associated with processing and maintaining the loan.

Distribution Fees

Distribution fees are charged when participants withdraw money from their retirement plan accounts, either as a lump sum or through periodic payments.

QDRO Processing Fees

Qualified Domestic Relations Order (QDRO) processing fees are incurred when retirement plan assets are divided as part of a divorce settlement.

Regulatory Framework

Department of Labor (DOL) Regulations

ERISA Section 404(a)(5)

The ERISA Section 404(a)(5) establishes the requirement for plan fiduciaries to provide participant-level fee disclosures to help participants make informed decisions about their investments.

29 CFR 2550.404a-5

This regulation sets forth the specific requirements for participant-level fee disclosures, including the type and format of information that must be provided to participants.

Securities and Exchange Commission (SEC) Regulations

Form ADV Requirements

Investment advisers must provide clients with a Form ADV, which includes information about the adviser's fees, services, and potential conflicts of interest.

Regulation Best Interest (Reg BI)

Reg BI requires broker-dealers to act in the best interest of their clients when recommending investment products or strategies, including disclosing material fees and costs.

Fiduciary Responsibilities

Duty of Loyalty

Plan fiduciaries must act solely in the interest of plan participants, including providing transparent fee information.

Duty of Prudence

Plan fiduciaries must exercise care and diligence when selecting and monitoring plan investments, as well as ensuring that fees are reasonable.

Fee Disclosure Best Practices


Clear Presentation of Fees

Fees should be clearly presented in a manner that is easily understood by plan participants, avoiding jargon or complex terminology.

Avoiding Hidden Fees

All fees, including those that may not be readily apparent, should be disclosed to plan participants to ensure full transparency.


Frequency of Fee Disclosure Updates

Regular updates on fee disclosures should be provided to participants, ideally on an annual basis or whenever significant changes occur.

Use of Multiple Formats

Fee disclosures should be made available in various formats, such as print, online, and through mobile apps, to cater to the diverse preferences of plan participants.


Helping Participants Understand Fee Structures

Plan sponsors and service providers should offer resources and educational materials to help participants better understand fee structures and their impact on investment outcomes.

Providing Resources for Fee Comparison

Tools and resources should be made available to assist participants in comparing fees across different investment options and providers.

Impact of Fee Disclosures on Participant Outcomes

Informed Decision-Making

Transparent fee disclosures enable participants to make well-informed decisions about their investments and retirement planning strategies.

Increased Fee Awareness

Greater fee transparency can lead to increased fee awareness among participants, encouraging them to take a more active role in managing their retirement plan accounts.

Potential for Lower Fees and Improved Investment Performance

Transparent fee disclosures can result in increased competition among service providers, potentially driving down fees and improving overall investment performance for participants.

Challenges and Controversies

Complexity of Fee Structures

Fee structures can be complex and difficult to understand, posing challenges for participants when evaluating their investment options.

Inconsistencies in Fee Disclosures Across Providers

Fee disclosures can vary significantly across different providers and investment products, making it difficult for participants to make accurate comparisons.

Balancing the Need for Transparency With Information Overload

Ensuring transparency in fee disclosures while avoiding information overload is an ongoing challenge, as excessive detail can overwhelm participants and hinder effective decision-making.


Participant-Level Fee Disclosures play a vital role in fostering transparency and informed decision-making within the retirement plan industry.

These disclosures encompass various types of fees, including investment-related fees, plan administration fees, and individual service fees.

The regulatory framework, governed by the DOL and the SEC, sets the standards for fee disclosures and fiduciary responsibilities.

Implementing best practices in fee disclosure communication, such as ensuring transparency, using multiple formats, and providing educational resources, can enhance participant outcomes.

Challenges like complex fee structures, inconsistencies across providers, and information overload persist; continuous improvement and standardization in fee disclosure practices remain crucial for promoting transparency and supporting better retirement planning decisions for participants.

Participant-Level Fee Disclosures FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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