The U.S. Department of Labor has announced a rule that will aid fiduciaries of 401(k) and other employee benefit plans in determining the reasonableness of compensation paid to plan service providers, and help identify conflicts of interest that may affect a service provider's performance under a service contract or arrangement. The new rule would require contracts between certain providers and plans to require all services, and all direct and indirect compensation received by the service provider, to be disclosed in writing, as well as any possible conflicts of interest.

"One of the department's top priorities is improved disclosure in order to ensure that participants and fiduciaries have the information they need to make informed decisions," said U.S. Secretary of Labor Elaine L. Chao. "We are working quickly to implement regulations that foster fair, competitive and transparent prices for services as well as combat excessive or hidden plan fees."

The department is also proposing a class exemption to protect fiduciaries who unwittingly enter into contracts with service providers who fail to comply with disclosure obligations.