Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans, 43014-43044 [E8-16541]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 73, Number 142 (Wednesday, July 23, 2008)]
[Proposed Rules]
[Pages 43014-43044]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-16541]



[[Page 43013]]

-----------------------------------------------------------------------

Part IV





Department of Labor





-----------------------------------------------------------------------



Employee Benefits Security Administration



-----------------------------------------------------------------------



29 CFR Part 2550



Fiduciary Requirements for Disclosure in Participant[dash]Directed 
Individual Account Plans; Proposed Rule

Federal Register / Vol. 73, No. 142 / Wednesday, July 23, 2008 / 
Proposed Rules

[[Page 43014]]


-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2550

RIN 1210-AB07


Fiduciary Requirements for Disclosure in Participant-Directed 
Individual Account Plans

AGENCY: Employee Benefits Security Administration.

ACTION: Proposed regulation.

-----------------------------------------------------------------------

SUMMARY: This document contains a proposed regulation under the 
Employee Retirement Income Security Act of 1974 (ERISA) that, upon 
adoption, would require the disclosure of certain plan and investment-
related information, including fee and expense information, to 
participants and beneficiaries in participant-directed individual 
account plans (e.g., 401(k) plans). This proposal is intended to ensure 
that all participants and beneficiaries in participant-directed 
individual account plans have the information they need to make 
informed decisions about the management of their individual accounts 
and the investment of their retirement savings. This document also 
contains proposed conforming changes to the regulations applicable to 
ERISA section 404(c) plans (29 CFR 2550.404c-1). Upon adoption, these 
proposals will affect plan sponsors, fiduciaries, participants and 
beneficiaries of participant-directed individual account plans, as well 
as providers of services to such plans.

DATES: Written comments on the proposed regulation should be received 
by the Department of Labor on or before September 8, 2008.

ADDRESSES: To facilitate the receipt and processing of comment letters, 
the Employee Benefits Security Administration (EBSA) encourages 
interested persons to submit their comments electronically by e-mail to 
e-ORI@dol.gov (enter into subject line: Participant Fee Disclosure 
Project) or by using the Federal eRulemaking portal at https://
www.regulations.gov. Persons submitting comments electronically are 
encouraged not to submit paper copies. Persons interested in submitting 
paper copies should send or deliver their comments to the Office of 
Regulations and Interpretations, Employee Benefits Security 
Administration, Attn: Participant Fee Disclosure Project, Room N-5655, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. All comments will be available to the public, without charge, 
online at https://www.regulations.gov and https://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: Susan M. Halliday or Kristen L. 
Zarenko, Office of Regulations and Interpretations, Employee Benefits 
Security Administration, (202) 693-8510. This is not a toll-free 
number.

SUPPLEMENTARY INFORMATION: 

A. Background

    According to the Department's most recent data, there are an 
estimated 437,000 participant-directed individual account plans, 
covering an estimated 65 million participants, and holding almost $2.3 
trillion in assets.\1\ With the proliferation of these plans, which 
afford participants and beneficiaries the opportunity to direct the 
investment of all or a portion of the assets held in their individual 
plan accounts, participants and beneficiaries are increasingly 
responsible for making their own retirement savings decisions. This 
increased responsibility has led to a growing concern that participants 
and beneficiaries may not have access to, or if accessible, may not be 
considering information critical to making informed decisions about the 
management of their accounts, particularly information on investment 
choices, including attendant fees and expenses.
---------------------------------------------------------------------------

    \1\ 2005 Form 5500 Data, U.S. Department of Labor. The estimated 
437,000 plans include plans that permit participants to direct the 
investment of all or a portion of their individual accounts.
---------------------------------------------------------------------------

    Under ERISA, the investment of plan assets is a fiduciary act 
governed by the fiduciary standards in ERISA section 404(a)(1)(A) and 
(B), which require fiduciaries to act prudently and solely in the 
interest of the plan's participants and beneficiaries. Where a plan 
assigns investment responsibilities to the plan's participants and 
beneficiaries, it is the view of the Department that plan fiduciaries 
must take steps to ensure that participants and beneficiaries are made 
aware of their rights and responsibilities with respect to managing 
their individual plan accounts and are provided sufficient information 
regarding the plan, including its fees and expenses, and designated 
investment alternatives, including fees and expenses attendant thereto, 
to make informed decisions about the management of their individual 
accounts. To some extent, such disclosures are already required by 
plans that elect to comply with the requirements of section 404(c) (see 
Sec.  2550.404c-1(b)(2)(i)(B)). However, compliance with section 
404(c)'s disclosure requirements is voluntary and does not extend to 
participants and beneficiaries in all participant-directed individual 
account plans.
    The Department believes that all participants and beneficiaries 
with the right to direct the investment of assets held in their 
individual plan accounts should have access to basic plan and 
investment information. For this reason, the Department is issuing this 
proposed regulation under section 404(a), with conforming amendments to 
the regulations under section 404(c). These proposals would establish 
uniform, basic disclosures for such participants and beneficiaries, 
without regard to whether the plan in which they participate is a 
section 404(c) plan. In addition, the proposal would require 
participants and beneficiaries to be provided investment-related 
information in a form that encourages and facilitates a comparative 
review among investment options.
    To facilitate the development of a proposed regulation, the 
Department published, on April 25, 2007, a Request for Information 
(RFI) in the Federal Register \2\ requesting suggestions, comments and 
views from interested persons on a variety of issues relating to the 
disclosure of plan and investment-related fee and expense and other 
information to participants and beneficiaries in participant-directed 
individual account plans. The Department received and reviewed 106 
comment letters on these important issues. Copies of these letters are 
posted on the Department's Web site at https://www.dol.gov/ebsa/regs/
cmt-feedisclosures.html.
---------------------------------------------------------------------------

    \2\ 72 FR 20457 (April 25, 2007).
---------------------------------------------------------------------------

    The RFI encouraged persons preparing comments to consider a 2004 
report and recommendations of a working group of the ERISA Advisory 
Council. The Employee Welfare and Pension Benefit Plans' Working Group 
on Fee and Related Disclosures to Participants reviewed the disclosure 
requirements applicable to participant-directed individual account 
plans. The Working Group assessed the adequacy and usefulness of such 
requirements and recommended changes to the requirements to help 
participants more effectively manage their retirement savings.\3\
---------------------------------------------------------------------------

    \3\ This report may be accessed at https://www.dol.gov/ebsa/
publications/AC_111704_report.html.

---------------------------------------------------------------------------

[[Page 43015]]

    Additionally, the RFI encouraged commenters to consider the 
Government Accountability Office's (GAO) 2006 report and 
recommendations contained in ``Private Pensions: Changes Needed to 
Provide 401(k) Plan Participants and the Department of Labor Better 
Information on Fees.'' \4\ Also relevant to the Department's 
consideration was the work of the Securities and Exchange Commission 
(Commission). The Commission has proposed, among other matters, the use 
of a summary prospectus with additional information provided on an 
Internet Web site. The proposal is intended to improve mutual fund 
disclosure by providing investors with key information in plain English 
in a clear and concise format, while enhancing the means of delivering 
more detailed information to investors.\5\ Following consultation with 
the Commission, the Department's proposal is coordinated with the 
Commission's summary prospectus approach where feasible. As ERISA plan 
investment options include many products not subject to the 
Commission's disclosure requirements, the Department seeks comments 
addressing the application of this proposed regulation to funds and 
investment products not subject to the securities laws.
---------------------------------------------------------------------------

    \4\ The GAO report, GAO-07-21, referenced above may be accessed 
at https://www.gao.gov/htext/d0721.html.
    \5\ 72 FR 67790 (November 30, 2007).
---------------------------------------------------------------------------

B. Overview of Proposal Sec.  2550.404a-5

1. General

    Paragraph (a) of proposed Sec.  2550.404a-5 sets forth the general 
principle that, where documents and instruments governing an individual 
account plan provide for the allocation of investment responsibilities 
to participants and beneficiaries, plan fiduciaries, consistent with 
ERISA section 404(a)(1)(A) and (B), must take steps to ensure that such 
participants and beneficiaries, on a regular and periodic basis, are 
made aware of their rights and responsibilities with respect to the 
investment of assets held in, or contributed to, their accounts and are 
provided sufficient information regarding the plan, including plan fees 
and expenses, and regarding designated investment alternatives 
available under the plan, including fees and expenses attendant 
thereto, to make informed decisions with regard to the management of 
their individual accounts. As discussed below, the proposal addresses 
the information that must be provided participants and beneficiaries, 
as well as timeframes for providing that information.
    Paragraph (b) of the proposal addresses the disclosure requirements 
that must be met by plan fiduciaries for plan years beginning on or 
after January 1, 2009. Under this paragraph, plan fiduciaries must 
comply with the requirements of paragraph (c), dealing with plan-
related information, and paragraph (d), dealing with investment-related 
information. Paragraph (e) describes the form in which the required 
information may be disclosed, such as via the plan's summary plan 
description, a quarterly benefit statement, or the use of the provided 
model, depending on the specific information. Paragraph (e) merely 
recognizes various acceptable means of disclosure; it does not preclude 
other means for satisfying disclosure duties under the proposed 
regulation. Fiduciaries that meet the requirements of paragraphs (c) 
and (d) will have satisfied the duty to make the regular and periodic 
disclosures described in paragraph (a) of this section.
    The Department believes, as an interpretive matter, that ERISA 
section 404(a)(1)(A) and (B) impose on fiduciaries of all participant-
directed individual account plans a duty to furnish participants and 
beneficiaries information necessary to carry out their account 
management and investment responsibilities in an informed manner. In 
the case of plans that elected to comply with section 404(c) before 
finalization of this proposal, the requirements of section 404(a)(1)(A) 
and (B) typically would have been satisfied by compliance with the 
disclosure requirements set forth at 29 CFR Sec.  2550.404c-
1(b)(2)(i)(B). However, the Department expresses no view with respect 
to plans that did not comply with section 404(c) and the regulations 
thereunder as to the specific information that should have been 
furnished to participants and beneficiaries in any time period before 
this regulation is finalized.

2. Plan-Related Information

    In general, paragraph (c) of the proposal sets forth what is 
characterized as ``plan-related'' information. This information falls 
into three categories--general plan information, administrative expense 
information and individual expense information. Paragraph (c) also 
describes when this information must be provided to participants and 
beneficiaries and requires that it be based on the latest information 
available to the plan.
    First, paragraph (c)(1) of the proposal provides for the disclosure 
of general plan information regarding: How participants and 
beneficiaries may give investment instructions; any specified 
limitations on such instructions, including any restrictions on 
transfer to or from a designated investment alternative; the exercise 
of voting, tender and similar rights appurtenant to an investment in a 
designated investment alternative as well as any restrictions on such 
rights; the specific designated investment alternatives offered under 
the plan; and any designated investment managers to whom participants 
and beneficiaries may give investment directions. Under the proposal, 
this information is required to be furnished to an individual on or 
before the date he or she becomes eligible to be a participant or 
beneficiary under the plan and at least annually thereafter. In 
addition, the proposal requires that participants and beneficiaries be 
furnished a description of any material changes to the required 
information not later than 30 days after the date of adoption of such 
changes. The Department believes that, by referencing the ``date of 
adoption,'' the regulation will increase the likelihood that 
participants and beneficiaries will be provided notification of 
material changes in advance of the changes becoming effective, thereby 
putting them in a better position to consider such changes (e.g., 
changes in designated investment alternatives) in managing their 
accounts. Paragraph (e)(1) of the proposal provides that the 
disclosures required by this paragraph (c)(1) may be made as part of 
the plan's summary plan description, provided that the applicable 
timing requirements are satisfied.
    Second, paragraph (c)(2)(i) sets out the required disclosures for 
administrative expenses. Specifically, it provides that, on or before 
the date of an individual's eligibility to become a participant or 
beneficiary under the plan, and at least annually thereafter, 
participants and beneficiaries must be furnished an explanation of any 
fees and expenses for plan administrative services (e.g., legal, 
accounting, recordkeeping) that, to the extent not included in 
investment-related fees and expenses, may be charged against the 
individual accounts of participants or beneficiaries and the basis on 
which such charges will be allocated to, or affect the balance of, each 
individual account (e.g., pro rata, per capita). This requirement is 
intended to ensure that the plan fiduciary informs all participants and 
beneficiaries about the plan's day-to-day operational expenses that 
will be charged against their accounts. Because of its general nature,

[[Page 43016]]

the information described in paragraph (c)(2)(i) may, pursuant to 
paragraph (e)(1) of the proposal, be disclosed as part of the plan's 
summary plan description, provided that the applicable timing 
requirements are met.
    In addition to the general disclosures concerning plan 
administrative expenses, paragraph (c)(2)(ii) of the proposal requires 
that, at least quarterly, participants and beneficiaries be furnished 
statements of the dollar amounts actually charged during the preceding 
quarter to the participants' or beneficiaries' accounts for 
administrative services, and general descriptions of the services to 
which the charges relate. The statements should be sufficiently 
specific to inform the participants or beneficiaries of the actual 
charge(s) to their accounts and enable them to distinguish the 
administrative services from other charges and services that may be 
assessed against their accounts. An identification of the total 
administrative fees and expenses assessed during the quarter, with, for 
example, an indication that the charges for plan administrative 
expenses include legal, accounting, and recordkeeping costs to the 
plan, would be sufficient. The Department does not believe that it is 
necessary, or particularly useful, for participants to have 
administrative charges broken out and listed on a service-by-service 
basis. Commenters on the Department's RFI argued that an overly 
detailed breakdown of administrative fees may overwhelm participants 
and that meaningful information would not be conveyed by such a 
breakdown. Many commenters explicitly supported the disclosure of 
``aggregate'' or summary fees. The requirement to furnish the 
information described in paragraph (c)(2)(ii) of the proposal may be 
satisfied by including the information as part of a quarterly benefit 
statement furnished pursuant to ERISA section 105(a)(1)(A)(i). See 
paragraph (e)(2) of the proposal.
    Third, paragraph (c)(3) describes the required disclosures for 
individual expenses. This is identical to paragraph (c)(2) except that 
it focuses on the disclosure of information relating to individual 
expenses, i.e., expenses that are assessed on an individual-by-
individual, rather than plan-wide, basis. Such expenses might be 
attendant to a qualified domestic relations order, a participant loan, 
or investment advice services. Paragraph (c)(3)(i) requires the 
disclosure of information concerning what expenses might be assessed 
and paragraph (c)(3)(ii) requires the disclosure of amounts actually 
assessed and identification of the service to which an expense relates. 
Also, like paragraph (c)(2), information described in paragraph 
(c)(3)(i) may be disclosed in the plan's summary plan description and 
the information described in paragraph (c)(3)(ii) may be included in a 
quarterly benefit statement.
    The Department invites comments on the type of information required 
to be disclosed, the timing of the information required to be disclosed 
and the form in which the information may be disclosed.

3. Investment-Related Information

    Paragraph (d) of the proposal sets forth the investment-related 
information required to be furnished or made accessible to participants 
and beneficiaries in participant-directed individual account plans. 
Paragraph (d)(1) sets forth the investment-related information required 
to be automatically furnished to each participant and beneficiary. 
Paragraph (d)(2) addresses the format of the required information. 
Paragraph (d)(3) addresses the furnishing of post-investment 
information. And paragraph (d)(4) sets forth information required to be 
furnished only upon the request of a participant or beneficiary.
    Paragraph (d)(1) provides that, on or before the date of 
eligibility and at least annually thereafter, participants and 
beneficiaries must be furnished certain basic information with respect 
to each designated investment alternative offered under the plan. For 
purposes of the proposal, paragraph (h)(1) defines the term 
``designated investment alternative'' to mean any investment 
alternative designated by the plan into which participants and 
beneficiaries may direct the investment of assets held in, or 
contributed to, their individual accounts. The term ``designated 
investment alternative'' does not include ``brokerage windows,'' 
``self-directed brokerage accounts,'' or similar plan arrangements that 
enable participants and beneficiaries to select investments beyond 
those designated by the plan.
    For purposes of identifying the information essential for 
participants and beneficiaries to consider in evaluating their 
investment choices under the plan, the Department carefully reviewed 
the many comments received in response to the RFI, as well as the 
Commission's proposal for a summary prospectus. The majority of RFI 
commenters believe that, in addition to basic fee and expense 
information, participants and beneficiaries need additional disclosure 
to put fee-related information into context and to educate them about a 
plan's investment alternatives. On the basis of its review, the 
Department concluded that fee and expense information, although 
important, is only one of the factors to be considered in making 
informed investment decisions along with investment performance and 
other information relating to a designated investment alternative. 
Also, the Department is persuaded by RFI commenters that most 
participants and beneficiaries will probably not review large amounts 
of detailed investment information. Information that is too detailed 
may overwhelm participants, and commenters are concerned that the costs 
associated with providing overly detailed information, which ultimately 
will be borne by participants, significantly outweigh any possible 
benefits. However, the Department also is persuaded that the form in 
which information is required to be presented should serve to encourage 
and facilitate its review by participants and beneficiaries. Many 
commenters on the RFI, for example, supported the disclosure of fee 
information in a format that would facilitate comparison across a 
plan's investment alternatives. For this reason, paragraph (d)(2) of 
the proposal, as discussed later, requires the investment-related 
information set forth in paragraph (d)(1) to be presented in a 
comparative format.
    Specifically, paragraph (d)(1) requires the following disclosures 
with respect to each designated investment alternative under the plan:
    Paragraph (d)(1)(i) requires, among other items, the name and 
category (e.g., money market mutual fund, balanced fund, index fund, 
and whether the investment alternative is actively or passively 
managed) of the designated investment alternative and an Internet Web 
site address that is sufficiently specific to lead participants and 
beneficiaries to supplemental information regarding the investment 
alternative, including its principal strategies, risks, performance and 
costs. For example, such information may be contained in a Commission-
required prospectus (or other document) made available at a Web site 
address. The Department believes that ready access to such information 
via the Internet alleviates the need to automatically furnish otherwise 
important, detailed investment-related information directly to every 
participant and beneficiary. This accommodates different levels of 
participant interest in such information. The Department recognizes 
that, while many investment fund providers do maintain Web sites to 
inform interested investors concerning specific investment funds, other 
providers of

[[Page 43017]]

investment funds and products may not. The Department specifically 
invites comments on what, if any, challenges this proposed requirement 
may present for service providers and employers, such as in the case of 
in-house managed funds that might be offered as a designated investment 
alternative under a plan. The Department also is interested in comments 
on whether this proposed requirement raises any issues under the 
Department's rules on the use of electronic media (29 CFR 2520.104b-
1(c)), given that plan fiduciaries may, in some cases, have to provide 
paper copies of the supplemental information listed in this requirement 
(i.e., information that would otherwise be accessible through the 
Internet Web site address) to participants who fail to affirmatively 
consent to receiving such information electronically.
    Paragraph (d)(1)(ii) of the proposal requires the disclosure of 
specified performance data for each of the plan's designated investment 
alternatives. For designated investment alternatives with respect to 
which the return is not fixed, e.g., an equity index fund, the 
fiduciary (or designee) must provide the average annual total return 
(expressed as a percentage) of the investment for the following 
periods, if available: 1-year, 5-year, and 10-year, measured as of the 
end of the applicable calendar year; as well as a statement indicating 
that an investment's past performance is not necessarily an indication 
of how the investment will perform in the future. For this purpose, the 
term ``if available'' is intended merely to reflect that some plan 
investments may not have been in existence for 1, 5, or 10 years. In 
such cases, plans are expected to explain that the data is not 
available for this reason (e.g., ``not applicable'' or ``not 
available''). In the case of designated investment alternatives for 
which the return is fixed for the term of the investment, e.g., a 
guaranteed investment contract, the fiduciary (or designee) must 
provide both the fixed rate of return and the term of the investment. 
For purposes of paragraph (d)(1)(ii), the term ``average annual total 
return'' is defined in section (h)(2) of the proposal by reference to 
standards applicable to open-end management investment companies 
registered under the Investment Company Act of 1940 (the 1940 Act). The 
Department specifically invites comments on what, if any, problems the 
proposed definition presents for investment funds and products that are 
not subject to the 1940 Act and, if problematic, suggestions for 
alternative definitions or approaches.
    As a corollary to the disclosure of performance data, paragraph 
(d)(1)(iii) requires disclosure of performance data for an appropriate 
broad-based benchmark over time periods that are comparable to the 
performance data periods required under paragraph (d)(1)(ii). As 
structured, the proposal provides flexibility in identifying an 
appropriate benchmark. In general, the Department expects that most 
plans will simply identify the performance benchmark already being used 
for the investment option pursuant to the Commission's prospectus 
requirements, if applicable. The Department seeks comments on whether 
and how the proposed requirement may need to be modified to include a 
more narrowly based index that reflects the financial market sector for 
ERISA plan investment options that are not subject to the securities 
laws.
    Paragraph (d)(1)(iv) specifically addresses the disclosure of fees 
and expenses attendant to the purchase, holding and sale of each of the 
plan's designated investment alternatives. For designated investment 
alternatives with respect to which the return is not fixed, the 
fiduciary (or designee) must provide: (A) The amount and a description 
of each shareholder-type fee (i.e., fees charged directly against a 
participant's or beneficiary's investment), such as sales loads, sales 
charges, deferred sales charges, redemption fees, surrender charges, 
exchange fees, account fees, purchase fees, and mortality and expense 
fees; (B) the total annual operating expenses of the investment 
expressed as a percentage (e.g., expense ratio); and (C) a statement 
indicating that fees and expenses are only one of several factors that 
participants and beneficiaries should consider when making investment 
decisions. In the case of designated investment alternatives with 
respect to which the return is fixed for the term of the investment, 
the fiduciary (or designee) must provide the amount and a description 
of any shareholder-type fees that may be applicable to a purchase, 
transfer or withdrawal of the investment in whole or in part. The 
description of each shareholder-type fee must include the amount on 
which the charge is applied, e.g., 4% of amount invested. For purposes 
of paragraph (d)(1)(iv), the term ``total annual operating expenses'' 
is defined in paragraph (h)(3) of the proposal by reference to 
standards applicable to open-end management investment companies 
registered under the 1940 Act. The Department specifically invites 
comments on what, if any, problems the proposed definition presents for 
investment funds and products that are not subject to the 1940 Act and, 
any suggestions for alternative definitions or approaches.
    The Department has differentiated the fee and expense disclosures 
required for designated investment alternatives with returns that vary 
over time from alternatives with fixed returns based on the financial 
nature of each of these investment types. While the disclosure 
requirements for investments with respect to which the return is not 
fixed are more comprehensive, the Department decided that the most 
essential information for participants who choose to invest in fixed 
investment alternatives is the contractual interest rate paid to their 
accounts and the term of the investment during which their monies are 
shielded from market price fluctuations and reinvestment risks. Any 
fees assessed, of course, are factored into determining the contractual 
interest rate and RFI commentary suggested that there would be little 
benefit to participants to disclosing such fees for investments with 
fixed returns.
    Paragraph (d)(1)(v) provides that, for purposes of the requirement 
that participants be provided information on or before the date they 
are eligible to be covered under the plan, plan fiduciaries may provide 
such participants the most recent annual disclosure furnished to 
participants and beneficiaries pursuant to paragraph (d)(1), in 
addition to any material changes to the information described in 
paragraph (c)(1)(i). This provision ensures that new participants 
receive at least the same information that has been furnished to other 
plan participants and beneficiaries with respect to the designated 
investment alternatives under the plan. It also avoids the possible 
burdens and costs of a requirement that fiduciaries update the required 
disclosures for each new plan participant, which could result in a 
daily updating requirement for many plans.
    Paragraph (d)(2) of the proposal requires the fiduciary to furnish 
the information required by paragraph (d)(1) in a chart or similar 
format that will permit straightforward comparison of the plan's 
designated investment alternatives by participants and beneficiaries. 
Many commenters on the RFI supported this requirement and agreed that 
any required disclosure should enable participants and beneficiaries to 
easily compare data across a plan's menu of designated investment 
alternatives. Further, GAO indicated in its 2006 report that plan 
sponsors should be required to disclose fee information on each 401(k) 
investment option in a way that

[[Page 43018]]

facilitates comparison among the options.\6\ The fiduciary's name and 
contact information must also be provided so that participants and 
beneficiaries may request the additional information listed in 
paragraph (d)(4). The chart or similar document also must include a 
statement informing participants and beneficiaries that more current 
information about a designated investment alternative, including 
performance and cost updates, may be available on the Web site for the 
investment alternative.
---------------------------------------------------------------------------

    \6\ See supra note 4.
---------------------------------------------------------------------------

    In response to commenters on the RFI, the Department has developed 
a model disclosure form that can be used for purposes of satisfying the 
disclosure requirements of paragraph (d)(2) of the proposal. The model 
appears in the Appendix to this regulation. Paragraph (e)(3) of the 
proposal specifically provides that a fiduciary that uses and 
accurately completes the model format set forth in the Appendix will be 
deemed to have satisfied the requirements of paragraph (d)(2) relating 
to the disclosure of the information in paragraph (d)(1) in a 
comparative form.\7\ The Department notes that the proposal would not 
mandate use of the model as the exclusive means for satisfying the 
requirement to provide a chart or similar format that facilitates 
comparison. This proposal provides fiduciaries with the flexibility to 
create a chart or comparative format of their own design, provided the 
required information is displayed in a manner facilitating comparisons.
---------------------------------------------------------------------------

    \7\ The Department notes that the model set forth in the 
Appendix includes information and statements that are merely 
illustrative of the type of information that might appear in the 
required disclosure. It is the responsibility of each plan fiduciary 
to assure itself that the information contained in its disclosure 
statement is complete and accurate. However, such fiduciaries shall 
not be liable for their reasonable and good faith reliance on 
information furnished by their service providers with respect to 
those disclosures required by paragraph (d)(1).
---------------------------------------------------------------------------

    Paragraph (d)(3) of the proposal requires that when a plan provides 
for the pass-through of voting, tender and similar rights, the 
fiduciary must furnish participants and beneficiaries who have invested 
in a designated investment alternative with these features any 
materials about such rights that have been provided to the plan. This 
requirement is similar to the requirement currently applicable to 
section 404(c) plans. See Sec.  2550.404c-1(b)(2)(i)(B)(1)(ix).
    Paragraph (d)(4) of the proposal requires a fiduciary to furnish 
certain identified information either automatically or upon request by 
participants and beneficiaries, based on the latest information 
available to the plan. This provision is modeled on the requirements 
currently applicable to section 404(c) plans with respect to 
information to be furnished upon request of a participant or 
beneficiary. See Sec.  2550.404c-1(b)(2)(i)(B)(2).

4. Timing of Disclosures

    As discussed above, each of the various disclosures must be made 
within specific timeframes. The plan-related information concerning 
certain administrative procedures and expenses required by 
subparagraphs (c)(1)(i), (c)(2)(i), (c)(3)(i), and the investment-
related information required by subparagraph (d)(1) must be provided to 
each participant or beneficiary ``on or before the date of plan 
eligibility'' and ``at least annually thereafter.'' The proposal 
defines ``at least annually thereafter'' in paragraph (h)(4) to mean at 
least once in any 12-month period, without regard to whether the plan 
operates on a calendar or fiscal year basis.
    The proposal also requires that certain information be provided to 
participants and beneficiaries on a more frequent basis. Specifically, 
the actual dollar amounts charged to an individual's account during the 
preceding quarter for administrative and individual services must be 
disclosed in a statement to participants and beneficiaries ``at least 
quarterly'' pursuant to subparagraphs (c)(2)(ii) and (c)(3)(ii) of the 
proposal. The proposal defines ``at least quarterly'' in paragraph 
(h)(5) to mean at least once in any 3-month period.

5. Other Fiduciary Duties

    Paragraph (f) makes clear that nothing in the regulation would 
relieve a fiduciary of its responsibilities to prudently select and 
monitor service providers to the plan and the investments made 
available under the plan (i.e., designated investment alternatives).\8\
---------------------------------------------------------------------------

    \8\ Also, with regard to ERISA's general fiduciary standards, it 
should be noted that there may be extraordinary situations when 
fiduciaries will have a disclosure obligation beyond those addressed 
by this regulation. For example, if a plan fiduciary knew that, due 
to a fraud, information contained in a public financial report would 
mislead investors concerning the value of a designated investment 
alternative, the fiduciary would have an obligation to take 
appropriate steps to protect the plan's participants, such as 
disclosing the information or preventing additional investments in 
that alternative by plan participants until the relevant information 
is made public. See also Varity Corp. v. Howe, 516 U.S. 489 (1996) 
(plan fiduciary has a duty not to misrepresent to participants and 
beneficiaries material information relating to a plan).
---------------------------------------------------------------------------

C. Proposed Amendments to Sec.  2550.404c-1

    Also included in this notice are proposed amendments to the 
regulation under section 404(c) of ERISA, 29 CFR Sec.  2550.404c-1. The 
proposed amendments to section 2550.404c-1(b), (c) and (f) would 
integrate the disclosure requirements in the section 404(c) regulation 
with the new proposed section 2550.404a-5 disclosure requirements and 
thereby avoid having different disclosure rules for plans intending to 
comply with the section 404(c) requirements. In brief, the proposed 
amendments to the section 404(c) regulation eliminate references to 
disclosures encompassed in the new Sec.  2550.404a-5 proposal and 
incorporate cross-references to the new proposal, thereby establishing 
a uniform disclosure framework for all participant-directed individual 
account plans. The Department also is taking this opportunity to 
reiterate its long held position that the relief afforded by section 
404(c) and the regulation thereunder does not extend to a fiduciary's 
duty to prudently select and monitor designated investment managers and 
designated investment alternatives under the plan. Accordingly, it is 
the Department's view that a fiduciary breach or an investment loss in 
connection with the plan's selection of a designated investment 
alternative is not afforded relief under section 404(c) because it is 
not the result of a participant's or beneficiary's exercise of 
control.\9\ The Department is proposing to amend paragraph (d)(2) 
(entitled ``Limitation on liability of plan fiduciaries'') of Sec.  
2550.404c-1 to add a new subparagraph (iv) providing that, 
``[P]aragraph (d)(2)(i) does not relieve a fiduciary from the duty to 
prudently select and monitor any designated investment manager or 
designated investment alternative offered under the plan.''
---------------------------------------------------------------------------

    \9\ See 57 FR 46906, 46924, n.27 (preamble to Sec.  2550.404c-1) 
(October 13, 1992).
---------------------------------------------------------------------------

D. Effective Date

    The Department proposes that the regulations and amendments 
contained in this notice be effective for plan years beginning on or 
after January 1, 2009. The Department specifically invites comments on 
the earliest date on which the proposed regulation and amendments can 
or should be effective, addressing any administrative or programming 
costs or other issues that should be considered in establishing an 
effective date.

[[Page 43019]]

E. Regulatory Impact Analysis

    As discussed in the preceding sections, the proposed regulation 
would establish a uniform basic disclosure regime for participant-
directed plans. Many of the disclosures contained in the proposed 
regulation are similar to those required for participant-directed 
individual account plans that currently comply with section 404(c) and 
the Department's regulations issued thereunder. For other participant-
directed plans which choose not to be section 404(c) compliant there is 
some uncertainty as to what information is provided to participants; 
accordingly, the Department is assuming for purposes of this analysis 
that for some of the plans that choose not to be 404(c) compliant the 
proposal's disclosure requirements are new.
    Given the foregoing assumptions, the average incremental costs and 
benefits for participants in plans that provide section 404(c) 
compliant or similar disclosures will be smaller than for those in 
plans that do not provide this information. Participants in section 
404(c) compliant plans or in plans that provide similar information 
will not receive as large an added benefit from the proposal's new 
disclosure requirements because they are already receiving some of the 
information that would be required under the proposed regulation.

Executive Order 12866 Statement

    Under Executive Order 12866, the Department must determine whether 
a regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the Office 
of Management and Budget (OMB). Under section 3(f) of the Executive 
Order, a ``significant regulatory action'' is an action that is likely 
to result in a rule (1) having an effect on the economy of $100 million 
or more in any one year, or adversely and materially affecting a sector 
of the economy, productivity, competition, jobs, the environment, 
public health or safety, or State, local or tribal governments or 
communities (also referred to as ``economically significant''); (2) 
creating serious inconsistency or otherwise interfering with an action 
taken or planned by another agency; (3) materially altering the 
budgetary impacts of entitlement grants, user fees, or loan programs or 
the rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order. The 
Department has determined that this action is ``significant'' under 
section 3(f)(1) because it is likely to have an effect on the economy 
of more than $100 million in any one year.
    Accordingly, the Department has undertaken, as described below, an 
analysis of the costs and benefits of the proposed regulation in 
satisfaction of the requirements of the Executive Order and OMB 
Circular A-4. The Department believes that the proposed regulation's 
benefits justify its costs. The present value of the benefits over the 
ten year period is expected to be about $6.9 billion. The present value 
of the costs over the same time period is expected to be $759 million. 
Overall, the Department estimates that the proposed regulation will 
generate a net present value (or net present benefit) of almost $6.1 
billion over the time period 2009-2018, as is shown in Table 1.

           Table 1.--Summary of Discounted Benefits and Costs
------------------------------------------------------------------------
                                Benefits ($millions/  Costs ($millions/
             Year                      year)                year)
------------------------------------------------------------------------
 1 2009.......................                914.9                127.3
 2 2010.......................                855.0                 90.7
 3 2011.......................                799.1                 84.7
 4 2012.......................                746.8                 79.2
 5 2013.......................                698.0                 74.0
 6 2014.......................                652.3                 69.2
 7 2015.......................                609.6                 64.7
 8 2016.......................                569.8                 60.4
 9 2017.......................                532.5                 56.5
 10 2018......................                497.6                 52.8
                               -----------------------------------------
    Total with 7% Discounting.               6875.6                759.4
    Net Present Value 7%        ...................                6,116
     Discounting..............
    Net Present Value 3%        ...................                7,158
     Discounting..............
------------------------------------------------------------------------

Need for Regulatory Action
    A growing number of workers are preparing for retirement by 
participating in ERISA governed retirement plans that allow for 
participant direction of investments. How well plan participants are 
prepared for retirement is partly determined by how well they have 
invested their retirement savings. Among the key determinants of the 
return on an investment are fees and expenses. A one percentage point 
difference in fees can result in an 18 percent difference in 
savings.\10\
---------------------------------------------------------------------------

    \10\ The Commission reported that a $10,000 investment with an 
expense ratio of 1.5% invested for 20 years and having an annual 
return of 10% before fees will return roughly $49,725, while a 
similar investment with lower fees of 0.5% will return $60,858--an 
18% difference. Invest Wisely: An Introduction to Mutual Funds, 
https://www.sec.gov/investor/pubs/inwsmf.htm.
---------------------------------------------------------------------------

    In developing this proposed regulation, the Department considered 
why the market alone does not provide transparent fee disclosure to 
participants comparable to that prescribed by this regulation. In 
general, the market delivers products that are deemed valuable by 
consumers. The lack of transparent fee disclosure in this market 
suggests to the Department that individuals may underestimate the 
impact that fees and expenses can have on their account balances, and 
thus undervalue transparent fee disclosure. The Department believes 
that this causes individuals to make uninformed investment decisions 
that result in inferior outcomes to those that would result from making 
investment decisions based on full information. Retirement plan 
characteristics, including disclosure practices, are shaped in 
significant measure by labor market forces. Employers want to attract 
and retain productive employees and minimize cost. If employees 
undervalue disclosure, plans sponsors might under-provide it. Sub-
optimal levels of disclosure translate into inefficiencies in 
participant's choices of investment products and services. Evidence for 
this

[[Page 43020]]

undervaluation includes a wide dispersion of fees paid in 401(k) plans. 
As supported by a report of the Investment Company Institute,\11\ the 
fees that plans pay vary over a wide range. According to their study, 
23% of 401(k) stock mutual fund assets are in funds with an expense 
ratio of less than 50 basis points, while an equal amount of assets are 
in funds with an expense ratio of over 100 basis points. Some of this 
variation could be explained by the varying amount of assets in plans 
and their accompanying economies of scale. In addition, some plans 
might offer more, or more expensive, plan features. The Department 
believes, however, that a significant portion of the variation in plan 
fees is due to market inefficiencies.
---------------------------------------------------------------------------

    \11\ Investment Company Institute, ``The Economics of Providing 
401(k) Plans: Services, Fees, and Expenses, 2006,'' https://
www.ici.org/pdf/fm-v16n4.pdf.
---------------------------------------------------------------------------

    Understanding and comparing investment options available in a 
401(k) plan can be complicated and confusing for many participants. The 
magnitude of complexity and confusion may be defined by reference to 
the number of available investment options and the materials utilized 
for communicating investment-related information. For example, in plans 
that offer a large number of investment options, for which the primary 
communication is a full prospectus-like disclosure, understanding and 
comparing investment options may be challenging for the less 
financially savvy or less interested plan participants.\12\ Moreover, 
the process of gathering and comparing information may itself be time 
consuming.
---------------------------------------------------------------------------

    \12\ For example, the ERISA Advisory Council Working group 
reported that ``The Working Group questions the utility of the 
prospectus as a source of investment information. While its delivery 
is required under SEC rules for investment, it lacks any marginal 
utility to a plan participant in terms of making an investment 
decision,'' Report of the Working Group on Prudent Investment 
Process, 2006, https://www.dol.gov/ebsa/publications/AC_1106A_
report.html. The Department also received similar comments in 
response to its Request of Information regarding Fee Disclosures to 
401(k) Plan Participants from service providers and trade 
organizations. These comments can be accessed at https://www.dol.gov/
ebsa/regs/cmt-feedisclosures.html.
---------------------------------------------------------------------------

    The proposed regulation will help a large number of plan 
participants by placing investment-related information in a format that 
facilitates comparison of investment alternatives. This simplified 
format will make it easier and less time consuming for participants to 
find and compare the needed information. As a result, plan participants 
may make better investment decisions and may be better financially 
prepared for retirement.
Benefits
    The proposed regulation's disclosure requirements will provide 
important benefits to society. The provision of investment-related 
information in a comparative format is a new requirement for all 
participant directed individual account plans, including section 404(c) 
compliant plans, and is anticipated to be especially beneficial to plan 
participants. The Department believes that such information will enable 
participants to make better decisions on how to structure their 
investments on a prospective basis. These benefits with respect to the 
provision of investment-related information are quantified in more 
detail below.
(a) Reduction in Fees
    A review of the relevant literature suggests that plan participants 
on average pay fees that are higher than necessary by 11.3 basis points 
per year.\13\ The proposal's required disclosure of fees and expenses 
is expected to result in the payment of lower fees for many 
participants, assuming that participants will more consistently pick 
the lower cost comparable investment alternatives under their 
plans.\14\ Selection of the lower cost comparable investment 
alternatives will, in turn, result in increased plan participant 
account investment returns. In addition, the required disclosure could 
lead to reduced fees \15\ in the investment alternatives market as more 
fee transparency fosters more price competition in the market. 
Furthermore, the fee disclosure requirements may lead plan fiduciaries 
to give additional scrutiny to fees, and consequently to select less 
expensive comparable investment alternatives.
---------------------------------------------------------------------------

    \13\ ``Higher than necessary'' here means that the participant 
could have obtained equal value without incurring the expense. This 
calculation, based on fees paid in 401(k) plans, assumes that 
participants on average pay 11 or more basis points in unnecessary 
fees and expenses, in the form of expense ratios or loads. This 
assumption is conservative in light of evidence on the distribution 
of investor expense levels presented in: Brad M. Barber, Terrance 
Odean and Lu Zheng, ``Out of Sight, Out of Mind, The Effects of 
Expenses on Mutual Fund Flows,'' Journal of Business Vol. 79, No. 6 
p. 2095-2119 (2005); James J. Choi, David I. Laibson, and Brigitte 
C. Madrian, ``Why Does the Law of One Price Fail? An Experiment on 
Index Mutual Funds,'' NBER Working Paper No. W12261 (May 2006); 
Report, Deloitte Financial Advisory Services LLP. ``Fees and Revenue 
Sharing in Defined Contribution Retirement Plans,'' (December 6, 
2007) (on file with the Department); Edwin J. Elton, Martin J. 
Gruber, and Jeffrey A. Busse, ``Are Investors Rational? Choices 
Among Index Funds,'' NYU Working Paper, Social Science Research 
Network Abstract 340482 (June 2002); Sarah Holden and Michael 
Hadley, Investment Company Institute, ``The Economics of Providing 
401(k) Plans: Services, Fees and Expenses 2006,'' 16 Research 
Fundamentals, No. 4. (September 2007). This estimate of excess 
expense does not take into account less visible expenses such as 
mutual funds' internal transaction costs (including explicit 
brokerage commissions and implicit trading costs), which are 
sometimes larger than funds' expense ratios. Deloitte, supra; Jason 
Karceski, Miles Livingston, and Edward O'Neal, ``Portfolio 
Transactions Costs at U.S. Equity Mutual Funds,'' University of 
Florida Working Paper (2004) at https://thefloat.typepad.com/the_
float/files/2004_zag_study_on_mutual_fund_trading_costs.pdf.
    \14\ While increased disclosure to plan participants is expected 
to reduce fees, it is not clear by how much. Some participants may 
not make optimal use of the disclosed information to reduce fees 
when making investment decisions. Also, the proposal's disclosures 
are limited to plan's designated investment alternatives chosen by 
plan fiduciaries rather than by plan participants.
    \15\ In their mutual fund experiment, Choi et al. found that 
presenting the participants with a comparison fee chart, and not 
just a prospectus, reduced the fees paid by 12% to 49% depending on 
the group studied.
    James J. Choi, David I. Laibson, and Brigitte C. Madrian. May 
2006. ``Why Does the Law of One Price Fail? An Experiment on Index 
Mutual Funds.'' NBER Working Paper No. W12261.
---------------------------------------------------------------------------

    Although participants in section 404(c) compliant plans already 
receive much of the information that would be required under the 
proposed regulation, they are expected to receive a substantial 
incremental benefit. Participants in section 404(c) compliant plans, as 
well as many participants in plans that are not choosing to be section 
404(c) compliant, who invest in mutual funds that are designated 
investment alternatives under the plan already receive the fee 
information in the related funds' prospectuses. The proposal's required 
disclosure of a summary of fee and performance information in a 
comparable format may nevertheless be beneficial in assisting plan 
participants to make better investment decisions. Thus, the Department 
assumes that participants in plans that are not providing disclosures 
similar to that required under section 404(c) receive a larger added 
benefit from the proposal's disclosures than plan participants that 
receive section 404(c) compliant or similar disclosures.\16\
---------------------------------------------------------------------------

    \16\ The Department assumes that plan participants that already 
receive the section 404(c) required information will receive a 
benefit from the proposal that is two-thirds of that received by 
participants that do not already receive this information. In 
addition, the Department assumes that at least 80% of participants 
in plans that choose not to be 404(c) compliant, nevertheless, 
receive similar disclosures to participants in section 404(c) 
compliant plans. The Department specifically requests comments on 
the percentage of participants that already receive this information 
and the additional benefits that plan participants will receive due 
to the proposed regulation.
---------------------------------------------------------------------------

    The Department estimates that there will be assets of about $2.6 
trillion in participant-directed individual account

[[Page 43021]]

plans in 2009 \17\ and that about $3.0 billion in higher than necessary 
fees are being paid by plan participants. Assuming the proposal's fee 
disclosures will reduce the amount of higher than necessary fees paid 
on average (a) by 10% (11.3 basis points*10%=1.13 basis points) \18\ 
for participants in section 404(c) compliant plans or plans that 
provide similar information, and (b) by 15% (11.3 basis points*15%=1.70 
basis points) for participants in plans that do not receive section 
404(c) compliant or similar information, the Department believes that 
the proposal's fee disclosures will result in $307 million in fee 
savings for plan participants in 2009 as shown in Table 2.
---------------------------------------------------------------------------

    \17\ The Department estimates, using 2005 Form 5500 data, that 
in 2005 $2.3 trillion in assets were held in participant directed 
accounts. To arrive at a 2009 dollar estimate, this number is then 
adjusted for inflation. This estimate does not include growth due to 
new participants or contributions and it also ignores increases or 
decreases due to the returns on the assets. Overall, the Department 
believes it under estimates the total amount of assets in 2009.
    \18\ Choi et al. (2006) found that providing comparative fee 
information to the treatment groups reduced fees by 12% to 49%. 
While this estimate originated from an experiment using young 
educated subjects, the Department believes that the assumptions made 
here are reasonable as they were selected from the lower range of 
values.

                               Table 2.--Benefits Due to Reduction in Fees (2009)
----------------------------------------------------------------------------------------------------------------
                                                   Total amount
                                                   of assets in    Basis points       Percent      Benefits from
                  Type of plan                      plans  (in    of higher than  correction due   reduction in
                                                    millions of   necessary fees   to disclosure  fees (percent)
                                                   2009 dollars)
                                                             (A)             (B)             (C)     (A * B * C)
----------------------------------------------------------------------------------------------------------------
404(c) Plans and Plans with Similar Information.       2,500,000            0.11              10    $282,754,000
Non-404(c) Plans without Similar Information....         144,000            0.11              15      24,487,000
                                                 ---------------------------------------------------------------
    Total Undiscounted Benefits.................  ..............  ..............  ..............     307,241,000
----------------------------------------------------------------------------------------------------------------
Note: The displayed numbers are rounded to the nearest thousand and therefore may not add up to the totals.

    There is some question as to whether some reductions in fees might 
represent transfers (such as consumer surpluses being recaptured by 
participants from investment managers) rather than efficiency gains. 
The Department believes that fee reductions attributable to this 
proposed regulation will mostly reflect efficiency gains, especially in 
the longer run. Downward pressure on fees will favor more efficient 
means of producing investment and other plan services. It will also 
reflect a diminution of the market for services whose costs exceeds 
their benefits (such as movement from more active to more passive 
investment management in cases where the latter is more efficient). 
However, it is possible that some fraction of reduced fees could 
reflect a transfer.\19\ The Department invites comments on this 
possibility. Since a purpose of the proposed regulation is to help plan 
participants increase their retirement savings, and because the 
expected fee reduction furthers this goal, the Department's motivation 
is the same irrespective of whether fee savings reflect transfers or 
efficiency gains. In the absence of information of what portion of fee 
savings might reflect transfers, for purposes of this assessment all 
such savings is counted as benefits.
---------------------------------------------------------------------------

    \19\ Fees vary due to the number and type of investment 
alternatives selected by the plan fiduciary. Nevertheless, plan 
participants can still influence the amount of fees they pay. 
Participants can choose among, on average almost 19 alternatives 
(Vanguard. ``How America Saves 2006.'') in the plan and select lower 
cost investment options or change their allocation percentages. 
Participants can also ask the plan fiduciaries to offer lower cost 
alternatives.
---------------------------------------------------------------------------

(b) Reduction in Participant Search Time
    The proposed regulation will benefit plan participants by reducing 
the time they spend searching for and compiling fee and expense 
information. Although it is possible that all of these 65 million 
participants in participant directed individual account plans could 
benefit from increased disclosure, only a subset will choose to act on 
the disclosed information. The Department estimates that about at least 
29 percent of plan participants will spend time researching their 
plans' designated investment alternatives fee and expense information 
and are, therefore, likely to benefit from reduced search time and 
corresponding reduced costs. This estimate is based on an EBRI survey 
\20\ which found that 29 percent of the respondents that received 
educational materials from their plans read the materials and made a 
change in their retirement plan investments. This assumption results in 
nearly 19 million plan participants that could benefit from reduced 
search costs. The Department seeks comments on the extent to which this 
proposal may increase the percentage of plan participants who will 
spend time researching their plans.
---------------------------------------------------------------------------

    \20\ Employee Benefit Research Institute Issue Brief 
292, April, 2006.
---------------------------------------------------------------------------

    The same EBRI study found that respondents spent 19 hours per year 
on average planning for retirement. Of these 19 hours, the Department 
assumes that one-and-a-half hours could be saved on average for 
participants that are not receiving information like that required in 
section 404(c) and one hour for participants that are receiving section 
404(c) compliant or similar disclosures based on the proposal's 
increased fee disclosure information. This assumption results in 
approximately 19 million hours being saved by affected plan 
participants as a result of the proposed regulation. The Department 
seeks comments on this assumption.
    In order to convert the time-savings into a dollar estimate, the 
Department estimated how much the average participants would value the 
time saved. Since the search time is assumed to be spent during leisure 
time and in order to adjust for the difference that plan participants 
attribute to leisure time versus work time, an average total wage rate 
for private sector workers participating in a pension plan with 
individual accounts was reduced by 10 percent to derive at an average 
value rate of leisure time.\21\ Using a wage rate of a little less than 
$35 \22\ for private

[[Page 43022]]

sector workers participating in a pension plan with individual accounts 
results in an average value of an hour of leisure time of $31 for 2009. 
Thus, the benefits from reduced search time for plan participants are 
estimated at $608 million for 2