Federal Register / Vol. 72, No. 79 / Wednesday, April 25, 2007 / Proposed Rules 20457 

1See Final Regulation Regarding Participant 

Directed Individual Account Plans (ERISA Section 

404(c) Plans), 57 FR 46,906 (Oct.13, 1992) (codified 

at 29 CFR § 2550.404c–1). This regulation may be 

accessed at www.dol.gov/dol/allcfr/title_29/ 

Part_2550/29CFR2550.404c-1.htm. 

Form No. Form title 

Currently 

assigned 

OMB 

control No. 

* * * * * * * 

I–129 ......................................................... Petition for a Nonimmigrant Worker ............................................................................ 1615–0009 

* * * * * * * 

I–360 ......................................................... Petition for Amerasian Widow(er) or Special Immigrant ............................................. 1615–0020 

* * * * * * * 

Dated: April 16, 2007. 

Michael Chertoff, 

Secretary. 

[FR Doc. E7–7743 Filed 4–24–07; 8:45 am] 

BILLING CODE 4410–10–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2550 

RIN 1210–AB07 

Fee and Expense Disclosures to 

Participants in Individual Account 

Plans 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 

ACTION: Request for information. 

SUMMARY: The Department of Labor is 

currently reviewing the rules under the 

Employee Retirement Income Security 

Act (ERISA) applicable to the disclosure 

of plan administrative and investmentrelated fee and expense information to 

participants and beneficiaries in 

participant-directed individual account 

plans (e.g., 401(k) plans). The purpose 

of this review is to determine to what 

extent rules should be adopted or 

modified, or other actions should be 

taken, to ensure that participants and 

beneficiaries have the information they 

need to make informed decisions about 

the management of their individual 

accounts and the investment of their 

retirement savings. The purpose of this 

notice is to solicit views, suggestions 

and comments from plan participants, 

plan sponsors, plan service providers 

and members of the financial 

community, as well as the general 

public, on this important issue. 

DATES: Written or electronic responses 

should be submitted to the Department 

of Labor on or before July 24, 2007. 

ADDRESSES: Responses: To facilitate the 

receipt and processing of responses, 

EBSA encourages interested persons to 

submit their responses electronically by 

e-mail to e-ORI@dol.gov, or by using the 

Federal eRulemaking portal at http:// 

www.regulations.gov (follow 

instructions for submission of 

comments). Persons submitting 

responses electronically are encouraged 

not to submit paper copies. Persons 

interested in submitting written 

responses on paper should send or 

deliver their responses (preferably, at 

least three copies) to the Office of 

Regulations and Interpretations, 

Employee Benefits Security 

Administration, Room N–5669, U.S. 

Department of Labor, 200 Constitution 

Avenue, N.W., Washington, DC 20210, 

Attention: Fee Disclosure RFI. All 

written responses will be available to 

the public, without charge, online at 

http://www.regulations.gov and http:// 

www.dol.gov/ebsa, and at the Public 

Disclosure Room, N–1513, Employee 

Benefits Security Administration, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

FOR FURTHER INFORMATION CONTACT: 

Katherine D. Lewis, Office of 

Regulations and Interpretations, 

Employee Benefits Security 

Administration, Room N–5669, U.S. 

Department of Labor, Washington, DC 

20210, telephone (202) 693–8510. This 

is not a toll-free number. 

SUPPLEMENTARY INFORMATION: 

A. Background 

According to the Department’s most 

recent data, an estimated 41 million 

participants in 401(k) plans are 

permitted to direct the investment of all 

or a portion of their plan accounts. 

While contributions and earnings 

increase retirement savings in 401(k) 

and other participant-directed plans, 

fees and expenses charged to participant 

accounts can substantially reduce that 

growth. For this reason, it is important 

that plan participants, particularly those 

responsible for making their own 

investment decisions, consider what 

and how fees and expenses are charged 

to their individual accounts. 

In general, the purpose of this Request 

for Information (RFI) is to obtain, from 

the perspective of plan participants, 

plan sponsors and plan service 

providers, information concerning: (1) 

What administrative and investmentrelated fee and expense information 

participants should consider; (2) the 

manner in which that information 

should be provided or made available to 

participants; and, (3) who should be 

responsible for providing the 

information. Responses to this RFI will 

be used to assist the Department in 

determining to what extent rules should 

be developed or modified, or other 

courses of action pursued, to improve 

the information currently available to 

participants and beneficiaries relating to 

administrative and investment-related 

fees and expenses, recognizing that in 

many instances participants may have 

to bear the cost of disclosing such 

information. 

In considering the questions set forth 

in the RFI, commenters are encouraged 

to take into consideration the following 

initiatives. 

Section 404(c) Regulation 

In 1992, the Department adopted a 

final regulation under section 404(c) of 

ERISA.1 In general, the regulation sets 

forth the conditions under which 

participants are considered to be 

exercising control over the assets in 

their accounts, thereby relieving 

fiduciaries from liability for the results 

of participants’ investment decisions. 

Among other matters, the regulation, at 

§ 2550.404c–1(b)(2)(i)(B), conditions 

relief upon participants and 

beneficiaries being provided and having 

access to specific information 

concerning their plan and the 

investment options offered thereunder. 

In framing the disclosure requirements, 

the Department attempted to strike a 

balance between what it believed 

participants needed to make informed 

investment decisions and the burdens 


cprice-sewell on PRODPC61 with PROPOSALS
20458 Federal Register / Vol. 72, No. 79 / Wednesday, April 25, 2007 / Proposed Rules 

2This advisory opinion may be accessed at 

www.dol.gov/ebsa/regs/aos/ao2003-11a.html 

(September 8, 2003). 

and costs to participants and plan 

sponsors resulting from a broader 

disclosure mandate. There have been a 

number of changes since 1992 in what 

and how information is communicated 

to plan participants and investors 

generally. For this reason, this RFI seeks 

information on what changes, if any, 

should be made to the section 404(c) 

regulation. An example of one such 

change is the use of summary or profile 

prospectuses by mutual funds as a 

means by which to communicate basic 

information to investors. The use of 

profile prospectuses as a permissible 

means by which to communicate to 

participant-investors for purposes of 

compliance with the section 404(c) 

requirements was addressed in 

Advisory Opinion 2003–11A.2

To facilitate consideration of the 

section 404(c) disclosure requirements, 

the applicable provisions of section 

2550.404c–1(b)(2)(i) are set forth below 

in relevant part: 

(B) The participant or beneficiary is 

provided or has the opportunity to obtain 

sufficient information to make informed 

decisions with regard to investment 

alternatives available under the plan, and 

incidents of ownership appurtenant to such 

investments. For purposes of this 

subparagraph, a participant or beneficiary 

will not be considered to have sufficient 

investment information unless—

(1) The participant or beneficiary is 

provided by an identified plan fiduciary (or 

a person or persons designated by the plan 

fiduciary to act on his behalf): 

* * * * * 

(ii) A description of the investment 

alternatives available under the plan and, 

with respect to each designated investment 

alternative, a general description of the 

investment objectives and risk and return 

characteristics of each such alternative, 

including information relating to the type 

and diversification of assets comprising the 

portfolio of the designed investment 

alternative; 

* * * * * 

(v) A description of any transaction fees 

and expenses which affect the participant’s 

or beneficiary’s account balance in 

connection with purchases or sales of 

interests in investment alternatives (e.g., 

commissions, sales load, deferred sales 

charges, redemption or exchange fees); 

(vi) The name, address, and phone number 

of the plan fiduciary (and, if applicable, the 

person or persons designated by the plan 

fiduciary to act on his behalf) responsible for 

providing the information described in 

paragraph (b)(2)(i)(B)(2) upon request of a 

participant or beneficiary and a description 

of the information described in paragraph 

(b)(2)(i)(B)(2) which may be obtained on 

request; 

* * * * * 

(viii) In the case of an investment 

alternative which is subject to the Securities 

Act of 1933, and in which the participant or 

beneficiary has no assets invested, 

immediately following the participant’s or 

beneficiary’s initial investment, a copy of the 

most recent prospectus provided to the plan. 

This condition will be deemed satisfied if the 

participant or beneficiary has been provided 

with a copy of such most recent prospectus 

immediately prior to the participant’s or 

beneficiary’s initial investment in such 

alternative; 

(ix) Subsequent to an investment in a 

investment alternative, any materials 

provided to the plan relating to the exercise 

of voting, tender or similar rights which are 

incidental to the holding in the account of 

the participant or beneficiary of an 

ownership interest in such alternative to the 

extent that such rights are passed through to 

participants and beneficiaries under the 

terms of the plan, as well as a description of 

or reference to plan provisions relating to the 

exercise of voting, tender or similar rights. 

(2) The participant or beneficiary is 

provided by the identified plan fiduciary (or 

a person or persons designated by the plan 

fiduciary to act on his behalf), either directly 

or upon request, the following information, 

which shall be based on the latest 

information available to the plan: 

(i) A description of the annual operating 

expenses of each designated investment 

alternative (e.g., investment management 

fees, administrative fees, transaction costs) 

which reduce the rate of return to 

participants and beneficiaries, and the 

aggregate amount of such expenses expressed 

as a percentage of average net assets of the 

designated investment alternative; 

(ii) Copies of any prospectuses, financial 

statements and reports, and of any other 

materials relating to the investment 

alternatives available under the plan, to the 

extent such information is provided to the 

plan; 

(iii) A list of the assets comprising the 

portfolio of each designated investment 

alternative which constitute plan assets 

within the meaning of 29 CFR 2510.3–101, 

the value of each such asset (or the 

proportion of the investment alternative 

which it comprises), and, with respect to 

each such asset which is a fixed rate 

investment contract issued by a bank, savings 

and loan association or insurance company, 

the name of the issuer of the contract, the 

term of the contract and the rate of return on 

the contract; 

(iv) Information concerning the value of 

shares or units in designated investment 

alternatives available to participants and 

beneficiaries under the plan, as well as the 

past and current investment performance of 

such alternatives, determined, net of 

expenses, on a reasonable and consistent 

basis; and 

(v) Information concerning the value of 

shares or units in designated investment 

alternatives held in the account of the 

participant or beneficiary. 

Advisory Council Report 

In 2004, the Advisory Council on 

Employee Welfare and Pension Benefit 

Plans’ Working Group on Fee and 

Related Disclosures to Participants 

reviewed the current disclosure 

requirements applicable to participantdirected individual account plans. Their 

review sought to assess the adequacy 

and usefulness of such requirements 

and to determine whether changes to 

the requirements would help 

participants more effectively manage 

their retirement savings. Focusing on 

the requirements applicable to section 

404(c) plans, the working group issued 

a report containing a consensus 

recommendation, which is summarized 

below: 

The working group recognizes that 

providing actual fee information for a 

particular participant’s account over a stated 

period of time is not justified at this time by 

the cost of providing that information. Given 

the current state of technology and 

recordkeeping practices, it is a complex and 

costly procedure to sum the total costs to a 

particular participant’s account because of 

investment changes over time. Nonetheless, 

the working group saw examples of 

investment statements showing the expense 

of each investment option expressed as a 

ratio for each fund in which a participant 

was invested as of the date of the statement. 

The working group believes that this is 

pertinent information that is helpful in 

making the investment decision. This 

information can also be presented in an 

understandable format. 

With regard to the section 404(c) 

regulation, the consensus of the working 

group, recognizing that different 

considerations apply to open platform 

(also known as open brokerage) options 

in plans, made the following 

recommendations: 

The profile prospectus of each investment 

option should be delivered to each employee 

upon eligibility to participate. For those 

options not subject to the prospectus 

requirements, the working group 

recommended that the Department should 

require a disclosure with information 

substantially similar to the information on 

the profile prospectus. Providing this 

information prior to the initial investment 

decision should eliminate the need to 

automatically provide a full prospectus or 

other information concerning the particular 

investment options elected immediately after 

the investment options are elected. A 

participant would still be able to request 

such materials. 

Participants must be given materials (like 

a glossary) that explain the meaning of the 

terms used in the profile prospectus (or other 

like document) coincident with the delivery 

of the profile prospectus. This explanation 

would include a description of an expense 

ratio and what it means to have the 

investment expenses of an investment option 

expressed as a ratio. Included in this would 

be a mathematical example demonstrating 

the calculation necessary to approximately 

determine the expenses that apply to a 


cprice-sewell on PRODPC61 with PROPOSALS
Federal Register / Vol. 72, No. 79 / Wednesday, April 25, 2007 / Proposed Rules 20459 

3See recommendations of the GAO as set forth 

Report GAO–07–21 (November, 2006), 

www.gao.gov/htext/d0721.html. 

particular participant’s account investments 

as of a particular date. 

Account and investment recordkeepers 

should be encouraged to develop internet 

Web sites where participants can research 

information about plan investment options 

and review information about their own 

investment choices. Additionally, these 

recordkeepers should be encouraged to 

develop web-based tools for participants to 

calculate alternative investment scenarios 

that incorporate assumptions about 

investment expenses as well as rates of 

return. Nonetheless, it is not intended that 

the suggestions in this paragraph be made 

into requirements. 

To the extent that an annual statement is 

provided by the recordkeeper, the statement 

must provide the expenses of each 

investment option expressed as a ratio along 

with other information provided about the 

investment options. There must also be an 

identification of the investment expenses that 

are paid entirely or in part by the plan 

sponsor. The investment expenses do not 

include other expenses for general plan 

maintenance paid by the plan sponsor, 

including, but not limited to, legal expenses, 

consulting expenses and accounting 

expenses. If such investment expenses were 

paid in part by the plan sponsor, the portion 

so paid would be identified. 

Any new requirement implemented under 

this item 3 [annual statement 

recommendation] should have a delayed 

effective date as applied to small and 

medium sized plans, based on the number of 

participants. New requirements like those 

described in this item [annual statement 

recommendation] could be more costly to 

implement for such plans than for large 

plans. Defining what a small to medium size 

plan is for these purposes should err on the 

high side. Perhaps plans covering fewer than 

500 participants would come within this 

classification. Delaying the application 

would likely allow service providers time to 

design necessary systems to provide the 

contemplated disclosures in a cost effective 

manner for such sponsors. 

The Department should provide a sample 

model disclosure format that is available on 

its Web site. This would be a helpful 

addition to existing tools already provided on 

its Web site for understanding expenses both 

from the perspective of a participant and a 

plan sponsor. 

Commenters are encouraged to 

consider the report and 

recommendations of the working group 

in reviewing the issues identified in this 

RFI. This report may be accessed at 

www.dol.gov/ebsa/publications/ 

AC_111704_report.html. 

GAO Report 

In November 2006, the Government 

Accountability Office (GAO) published 

Report GAO–07–21 entitled ‘‘Private 

Pensions: Changes Needed to Provide 

401(k) Plan Participants and the 

Department of Labor Better Information 

on Fees.’’ This report recommends that, 

in order to better enable the Department 

to effectively oversee 401(k) plan fees, 

the Secretary of Labor should require 

plan sponsors to report a summary of all 

fees that are paid out of plan assets or 

by participants. The summary should 

list fees by type, particularly investment 

fees indirectly incurred by participants. 

Commenters are encouraged to 

consider the report and 

recommendations of the GAO in 

reviewing the issues identified in this 

RFI, including the GAO’s specific 

recommendation relating to fee 

disclosure. The GAO report referenced 

above may be accessed at www.gao.gov/ 

htext/d0721.html. 

B. Issues Under Consideration 

The purpose of this notice is to solicit 

views, suggestions and comments from 

plan participants, plan sponsors, plan 

service providers and members of the 

financial community, as well as the 

general public, as to what extent rules 

should be adopted or modified, or other 

action taken, to ensure that participants 

and beneficiaries have the information 

they need to make informed decisions 

about the management of their 

individual accounts and the investment 

of their retirement savings. To facilitate 

consideration of the issues, the 

Department has set forth below a 

number of matters with respect to which 

views, suggestions, comments and 

information are requested. Interested 

persons, however, are encouraged to 

address any other matters they believe 

to be germane to the Department’s 

consideration of fee and expense 

disclosure issues. 

Request for Information 

Disclosure of Information Relating to 

Plan Investment Options 

1. What basic information do 

participants need to evaluate investment 

options under their plans? If that 

information varies depending on the 

nature or type of investment option 

(options offered by a registered 

investment company, options offered 

under a group annuity contract, life 

cycle fund, stable value product, etc.), 

please include an explanation. 

2. What specific information do 

participants need to evaluate the fees 

and expenses (such as investment 

management and 12b–1 fees, surrender 

charges, market value adjustments, etc.) 

attendant to investment options under 

their plans? If that information varies 

depending on the nature or type of 

option, or the particular fee arrangement 

relating to options (e.g., bundled service 

arrangements), please include an 

explanation. 

3. To what extent is the information 

participants need to evaluate investment 

options and the attendant fees and 

expenses not currently being furnished 

or made available to them? Should such 

information be required to be furnished 

or made available by regulation or 

otherwise? Who should be responsible 

for furnishing or making available such 

information? What, if any, additional 

burdens and/or costs would be imposed 

on plan sponsors or plans (plan 

participants) for such disclosures? 

4. Should there be a requirement that 

information relating to investment 

options under a plan (including the 

attendant fees and expenses) be 

provided to participants in a summary 

and/or uniform fashion? Such a 

requirement might provide that: A) all 

investment options available under a 

participant-directed individual account 

plan must disclose information to 

participants in a form similar to the 

profile prospectus utilized by registered 

investment companies; or B) plan 

fiduciaries must prepare a summary of 

all fees paid out of plan assets directly 

or indirectly by participants and/or 

prepare annually a single document 

setting forth the expense ratios of all 

investment options under the plan.3

Who should be responsible for 

preparing such documents? Who should 

bear the cost of preparing such 

documents? What are the burden/cost 

implications for plans of making any 

recommended changes? 

5. How is information concerning 

investment options, including 

information relating to investment fees 

and expenses, communicated to plan 

participants, and how often? Does the 

information or the frequency with 

which the information is furnished 

depend on whether the plan is intended 

to be a section 404(c) plan? 

6. How does the availability of 

information on the internet pertaining to 

specific plan investment options, 

including information relating to 

investment fees and expenses, affect the 

need to furnish information to 

participants in paper form or 

electronically? 

7. What changes, if any, should be 

made to the section 404(c) regulation, to 

improve the information required to be 

furnished or made available to plan 

participants and beneficiaries, and/or to 

improve likelihood of compliance with 

the disclosure or other requirements of 

the section 404(c) regulation? What are 

the burden/cost implications for plans 

of making any recommended changes? 


cprice-sewell on PRODPC61 with PROPOSALS
20460 Federal Register / Vol. 72, No. 79 / Wednesday, April 25, 2007 / Proposed Rules 

8. To what extent should participantdirected individual account plans be 

required to provide or promote 

investment education for participants? 

For example, should plans be required 

or encouraged to provide a primer or 

glossary of investment-related terms 

relevant to a plan’s investment options 

(e.g., basis point, expense ratio, 

benchmark, redemption fee, deferred 

sales charge); a copy of the Department’s 

booklet entitled ‘‘A Look at 401(k) Fees’’

(www.dol.gov/ebsa/publications/ 

401k_employee.html) or similar 

publication; or investment research 

services? Should such a publication 

include an explanation of other 

investment concepts such as risk and 

return characteristics of available 

investment options? Please explain 

views, addressing costs and other issues 

relevant to adopting such a requirement. 

Disclosure of Information Relating to 

Plan and Individual Account 

Administrative Fees and Expenses 

9. What information is currently 

furnished to participants about the plan 

and/or individual administrative 

expenses charged to their individual 

account? Such expenses may include, 

for example: audit fees, legal fees, 

trustee fees, recordkeeping expenses, 

individual participant transaction fees, 

participant loan fees or expenses. 

10. What information about 

administrative expenses would help 

plan participants, but is not currently 

disclosed? Please explain the nature and 

usefulness of such information. 

11. How are charges against an 

individual account for administrative 

expenses typically communicated to 

participants? Is such information 

included as part of a participant’s 

individual account statement or 

furnished separately? If separately, is 

the information communicated via 

paper statements, electronically, or via 

website access? 

12. How frequently is information 

concerning administrative expenses 

charged to a participant’s account 

communicated? 

13. What, if any, requirements should 

the Department impose to improve the 

disclosure of administrative expenses to 

plan participants? Please be specific as 

to any recommendation and include 

estimates of any new compliance costs 

that may be imposed on plans or plan 

sponsors. 

14. Should charges for administrative 

expenses be disclosed as part of the 

periodic benefit statement required 

under ERISA section 105? 

General Questions 

15. What, if any, distinctions should 

be considered in assessing the 

informational needs of participants in 

plans that intend to meet the 

requirements of section 404(c) as 

contrasted with those of participants in 

plans that do not intend to meet the 

requirements of section 404(c)? 

16. What (and what portion of) plan 

administrative and investment-related 

fees and expenses typically are paid by 

sponsors of participant-directed 

individual account plans? How and 

when is such information typically 

communicated to participants? 

17. How would providing additional 

fee and expense information to 

participants affect the choices or 

conduct of plan sponsors and 

administrators, and/or that of vendors of 

plan products and services? Please 

explain any such effects. 

18. How would providing additional 

fee and expense information to 

participants affect their plan investment 

choices, plan savings conduct or other 

plan related behavior? Please explain 

any such effects and provide specific 

examples, if available. 

19. Please identify any particularly 

cost-efficient (high-value but 

inexpensive) fee and expense 

disclosures to participants, and to the 

contrary any particularly cost-inefficient 

ones. Please provide any available 

estimates of the dollar costs or benefits 

of such disclosures. 

Signed at Washington, DC, this 20th day of 

April 2007. 

Bradford P. Campbell, 

Acting Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

[FR Doc. E7–7884 Filed 4–24–07; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF DEFENSE 

Department of the Army, Corps of 

Engineers 

33 CFR Part 334 

United States Marine Corps Restricted 

Area and Danger Zone, Neuse River 

and Tributaries, Marine Corps Air 

Station Cherry Point, NC 

AGENCY: United States Army Corps of 

Engineers, DoD. 

ACTION: Notice of proposed rulemaking 

and request for comments. 

SUMMARY: The Corps of Engineers is 

proposing to amend its regulations to 

designate an existing rifle range fan as 

a danger zone. The military exercise 

area is located within the Rifle Range of 

Marine Corps Air Station Cherry Point, 

North Carolina, along the Neuse River. 

The danger zone will only be activated 

by the Marine Corps Air Station Cherry 

Point during range operational hours. 

The Marine Corps will advise residents 

in the vicinity of the range fan thus 

ensuring their safety by alerting them to 

temporary potential hazardous 

conditions which may exist as a result 

of small arms exercises. There will be 

no change in the use of the existing 

exercise area. The area, however, needs 

to be marked on navigation charts to 

insure security and safety for the public. 

Entry points into the danger zone will 

be prominently marked with signage 

indicating the boundary of the danger 

zone. The placement of aids to 

navigation and regulatory markers will 

be installed in accordance with the 

requirements of the United States Coast 

Guard. If the proposed signage exceeds 

nationwide permit and/or regional 

general permit conditions, the 

Commander, United States Marine 

Corps, Marine Corps Air Station Cherry 

Point, North Carolina will seek 

additional Department of the Army 

authorizations. 

DATES: Written comments must be 

submitted on or before May 25, 2007. 

ADDRESSES: You may submit comments, 

identified by docket number COE–

2007–0011, by any of the following 

methods: 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

E-mail: 

david.b.olson@usace.army.mil. Include 

the docket number, COE–2007–0011, in 

the subject line of the message. 

Mail: U.S. Army Corps of Engineers, 

ATTN: CECW–CO (David B. Olson), 441 

G Street, NW., Washington, DC 20314–

1000. 

Hand Delivery/Courier: Due to 

security requirements, we cannot 

receive comments by hand delivery or 

courier. 

Instructions: Direct your comments to 

docket number COE–2007–0011. All 

comments received will be included in 

the public docket without change and 

may be made available on-line at 

http://www.regulations.gov, including 

any personal information provided, 

unless the commenter indicates that the 

comment includes information claimed 

to be Confidential Business Information 

(CBI) or other information whose 

disclosure is restricted by statute. Do 

not submit information that you 

consider to be CBI or otherwise 

protected through http:// 

www.regulations.gov or e-mail. The 


cprice-sewell on PRODPC61 with PROPOSALS