Many employers can’t wait to distribute retirement plan fee disclosure statements to workers – and be done with the whole mess. But that strategy can really come back to hurt your company.

Instead of simply passing along the fee disclosure info to workers, some firms are using this opportunity to increase benefits understanding, show how dedicated they are to people’s needs and bolster employee morale.

Final run-through

Of course, before going the extra mile, employers should make sure they’ve satisfied all of the minimum requirements of the fee-disclosure statements. Be sure to ask:

• Did everybody get a statement? Obviously every employee who is enrolled in your 401(k) plan must receive a fee statement. But be sure not to forget all eligible, non-participating staffers and new hires, as well. They get one, too.
• Is the info clear enough? As plan sponsors, employers can either create their own statements – or rely on their 401(k) provider to do it for them. Regardless of what option firms choose, they must still provide the right info to employees. That means provider disclosure statements filled with overly vague info probably won’t pass muster with the Labor Department, and should be supplemented with wrap-around info by the company.

Beyond the bare minimum

Once the physical fee statements are in employees’ hands, there are a number of things employers should still be doing.

Liz Davidson, the founder of Financial Finesse, suggests the following best practices:

Assume they know nothing

It can’t be said enough: The fee statements will likely come as a shock to many workers. In fact, new research from AARP found that 71% of employees said they didn’t pay any 401(k) plan fees when, of course, they did. So, regardless of how clear the info you present is, you may need to do more than simply hand out fee-disclosure statements to employees.

Consider holding a companywide meeting (or meetings) where HR and benefits go over the statements with staff and answer any questions they may have about 401(k) plan fees.

Some additional best practices: Creating a frequently asked question guide and posting it on the company intranet, and making sure all HR and benefits staffers are prepared to adequately handle employees’ questions and concerns.

Educate them on key differences

When it comes to 401(k) plans, the vast majority of the fees employees pay go toward investment fees.

However, because these fees are deducted right from investment returns, workers are often in the dark that they’re paying these fees at all. And there are some major differences in high and low fees for this category.

Example: Managed accounts, which employees often get placed in, carry much higher fees than index funds (or passively managed funds).

Do apples-to-apples comparisons

Without a reference point, the 401(k) fees your employees pay will always seem excessive. That’s why it’s so important for employers to show just how your plan compares to other plans in your industry.

If the fees you pay are lower than the industry average, stress how that’s proof the company is taking its fiduciary duty very seriously. The key is to show employees how their 401(k) stacks up to the average plan.

Also, firms should resist the urge to place “fiduciary” responsibilities on the back burner after this is over. Reason: Another deadline is right around the corner. By Nov. 14, plan sponsors must issue the first of the required quarterly statements of fees deducted from individual accounts.