The DOL Can Change the 401k Industry Without Passing a Single New Law
Most people — including most retirement plan professionals — have never heard of a Field Assistance Bulletin.
A Field Assistance Bulletin is an interpretive document issued by the Employee Benefits Security Administration. It instructs EBSA field staff on how to apply existing law to specific situations and signals what the agency considers best practice. It requires no Congressional action. No notice-and-comment rulemaking. No industry permission. It can be issued on the agency's own timeline.
And the industry treats FABs as de facto standards even without the force of formal regulation. When EBSA signals through a FAB that something is expected practice, the market moves.
This matters most for small plans — and small plans are where the problem is most severe.
Plans with fewer than 100 participants represent more than 90 percent of all 401(k) plans by count. In my analysis of thousands of Form 5500 filings over 17 years, the vast majority of excessive fee cases I have documented involve plans under 100 participants. Total plan costs in small plans have remained persistently elevated with no meaningful decline following the 2012 disclosure regime. These are the roofing companies, electrical contractors, medical practices, law firms, and small manufacturers whose owners have never received an invoice, do not know their fees are negotiable, and in some cases do not know they are paying an advisor at all.
Large plans have investment committees, legal counsel, institutional pricing leverage, and audit requirements. Small plans have none of that. They are the most exposed and the least protected — and they are the constituency this administration has identified as its primary focus.
A Field Assistance Bulletin addressing four specific points would create for the first time the conditions for a functioning market in 401(k) plan services for small plans:
Encourage quarterly invoicing of participant-paid fees in dollars with a description of services rendered. Clarify that fees can be paid at the employer level — with material tax advantages that most plan sponsors are entirely unaware of. State explicitly that fees are negotiable. Clarify that there is no ERISA requirement to retain an investment advisor, and that plan sponsors have the right to renegotiate or eliminate advisory relationships at any time.
None of this requires fee caps, mandated provider structures, or changes to the fiduciary definition. It does not modify participant fee disclosure requirements. The legal authority already exists under Title I of ERISA. No new systems are required from providers — major recordkeepers already invoice employers for fees charged directly. The only missing element is regulatory guidance encouraging this information to be presented on a document that already exists, showing what was simultaneously extracted from participant accounts.
The 2012 fee disclosure regime required $425 million in first-year compliance costs and produced little to no measurable change in fee levels in small plans. A Field Assistance Bulletin on invoicing would cost providers essentially nothing to implement and would accomplish what the disclosure regime never could — put a bill in front of the person who can act on it.
Small business employees are depending on these plans for their retirement. Their employers deserve to know what they are paying, in dollars, for what services.
That fix has never required new legislation. It has always required someone to identify the right regulatory instrument and make the case for using it.
That instrument exists. It is called a Field Assistance Bulletin.