What Is a 404a-5 Plan? Participant Disclosures, Fees, and Delivery

A 404(a)(5) participant fee disclosure is the plain-language statement your workplace retirement plan has to give you under federal regulation 29 CFR 2550.404a-5, laying out what you pay in fees, how your investment options have performed, and what rules govern your account. It is not a type of plan or account. It is a document, and the Department of Labor requires it so that workers who pick their own investments have standardized, comparable numbers instead of having to decode fund prospectuses on their own.¹

If you’ve ever seen a chart lining up your 401(k) funds with their expense ratios and one-, five-, and ten-year returns next to a market benchmark, that chart exists because of this rule.

Which Plans Must Send You One

The rule covers participant-directed individual account plans governed by ERISA. In practice that means private-sector defined contribution plans where you choose how your money is invested: most 401(k) plans, ERISA-covered 403(b) plans, and profit-sharing plans that let employees direct their own investments.¹ The trigger is that investment risk sits with you, not your employer.

A few arrangements fall outside the rule even though they look similar. Simplified Employee Pensions (SEPs) and SIMPLE IRAs are excluded because they’re built on individual retirement accounts under Internal Revenue Code Sections 408(k) and 408(p).² Governmental 403(b) plans and church plans that haven’t elected ERISA coverage also sit outside the mandate, though their sponsors can adopt the same format voluntarily. Traditional pensions, where the employer makes the investment decisions and promises a set benefit, aren’t covered either.

What’s Inside the Disclosure

The document has three parts: the plan rules, the fees, and the investment comparison chart.

Plan Rules and Shared Administrative Fees

The disclosure starts with how the plan actually works: how to give investment instructions, any limits on how often you can move money between funds, and how voting rights on securities held in your account are handled.¹ A plan that only allows transfers once a quarter is telling you something about your flexibility.

It then describes the administrative expenses shared across everyone in the plan: legal compliance, annual audits, recordkeeping. The plan has to explain how those costs are divided. A pro-rata method charges you based on your account balance, so someone with $200,000 pays more than someone with $20,000. A per-capita method charges every participant the same flat dollar amount.

Some administrative costs don’t appear as a line-item deduction because they’re built into the funds themselves through revenue-sharing or 12b-1 fees. When plan expenses are paid that way, the quarterly statement has to flag it so you know the direct deductions aren’t the whole story.²

Individual Charges

Some fees only hit you if you take a specific action. Common ones include loan origination fees when you borrow from your account and the cost of processing a qualified domestic relations order during a divorce. You might also see charges for specialized advisory services or for trades outside the standard menu. The plan has to describe these possible charges up front and then show, on each quarterly statement, the actual dollar amount deducted and what it was for.¹

If your plan offers a self-directed brokerage window that lets you buy outside the core fund lineup, the disclosure has to identify it and explain the fees attached: account maintenance charges, per-trade commissions, and the higher expense ratios that often come with those investments.²

The Investment Comparative Chart

This is the heart of the disclosure. Every investment option in the plan has to appear on a single standardized chart so you can compare them directly. For each fund, the chart shows:

The fund’s name and category, such as large-cap stock, bond, or target-date.
Average annual total returns for one-year, five-year, and ten-year periods ending on the most recent calendar year. Funds that haven’t existed that long report returns since inception.
Returns for a broad-based market benchmark over the same periods, so you can see whether the fund is keeping pace. The benchmark can’t be run by an affiliate of the fund company unless it’s a widely recognized index.
The fund’s total annual operating expenses as a percentage (the expense ratio).
That same expense translated into a dollar amount per $1,000 invested, assuming no returns. A fund charging 0.50% costs $5.00 per year for every $1,000.

The chart also lists a website where you can pull up each fund’s prospectus, financial statements, and portfolio holdings. Before this format existed, comparing fees across funds meant pulling separate fact sheets and doing the math yourself. Most people never did.

When You Should Receive It

Three deadlines govern delivery:

An initial disclosure on or before the first day you can direct your investments.
An annual update at least once every twelve months reflecting current fees and performance.
A quarterly statement showing the actual dollar amounts deducted from your account for both shared administrative fees and individual charges during that quarter.

Changes between annual cycles get their own notice. If the plan adds or drops a fund, changes the fee structure, modifies transfer restrictions, or restructures its brokerage window, you must be notified at least 30 days before the change but no more than 90 days in advance. If something unforeseeable forces a last-minute change, you have to be told as soon as reasonably possible after the fact.¹

Paper or Electronic Delivery

Plans can deliver these documents electronically under two safe harbors. The 2002 rule allows default electronic delivery for employees whose jobs give them regular computer access at work. The 2020 safe harbor extends electronic delivery to anyone who has given the plan a valid email address or smartphone number, as long as the plan first mails a paper notice explaining the switch and offering a free opt-out.³ If neither safe harbor applies, the plan has to mail paper. Either way, you keep the right to request a paper copy at any time.

What to Do If You Haven’t Received Yours

Start with a written request to your plan administrator or HR department. Writing matters because it triggers ERISA’s 30-day response window and creates a paper trail. Under ERISA, an administrator who fails to provide required information within 30 days of a written request can be held personally liable in federal court for up to $100 per day, adjusted upward for inflation, with each affected participant counted separately.⁴

If the plan still doesn’t respond, file a complaint with the Department of Labor’s Employee Benefits Security Administration. You can do that online at askebsa.dol.gov or by calling 1-866-444-3272.⁵ EBSA benefits advisors handle complaints about ERISA-covered plans, can investigate whether your plan is meeting its disclosure obligations, and have authority to audit plans and pursue the fiduciaries if the pattern is widespread. You don’t need a lawyer, and the process is free.

1
eCFR. 29 CFR 2550.404a-5 – Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans
2
eCFR. 29 CFR 2550.404a-5 – Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans
3
Federal Register. Requirement To Provide Paper Statements in Certain Cases – Amendments to Electronic Disclosure Safe Harbors
4
Office of the Law Revision Counsel. 29 USC 1132 – Civil Enforcement
5
U.S. Department of Labor. Ask EBSA – Request Assistance