In an effort to bring “hidden” or excessive 401(k) fees to light, the Department of Labor on Thursday proposed requiring retirement- benefit-plan service providers to make added disclosures to plan fiduciaries. The aim is to help the plan sponsors gauge the reasonableness of what they pay the service providers and identify conflicts of interest that could affect their performance.

If adopted, the proposal would benefit retirement plans by possibly lowering their fees, increasing the efficiency of plan-service provider relationships, and reducing the costs of evaluating service providers, the DOL asserted.

“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,” said Secretary of Labor Elaine Chao.

Under the proposal, in their contracts with 401(k) or other retirement benefit plans, service providers would have to provide specific, detailed information about all services to be performed and all compensation to be received either directly from the plan or from third parties. The proposal includes a definition of “compensation or fees” and a rule for estimating the prospective amount of compensation.

Service providers also would have to describe any participation or interest they might have in transactions to be entered into by the plan; any material relationships with third parties that could create conflicts of interest; any compensation they might get without the plan fiduciary’s approval; and any policies or procedures they have that address potential conflicts of interest.