Beginning in April, the Department of Labor is mandating that 401(k) plan sponsors disclose all fees and expenses associated with 401(k)s in an understandable, uniform way. The industry is scrambling to meet these requirements.
When this regulation takes affect, 401(k) account holders should be able to see clearly what they're paying in the direct and indirect fees and expenses. This could have a big impact on your retirement planning.
If employers haven't made good choices about how their employees' 401(k) retirement savings is invested, they are likely to be in for some very tough questions.
Connie Certusi, senior vice president of Small Business Accounting Solutions, suggests that employees and employers avoid the rush and make sure before the end of this year that they are getting a good deal. Here are some key questions to ask:
- What are the total fees and expenses applicable to my companies' 401(k) plan?
- Does the return that 401(k) investors received justify the level of compensation that plan sponsors received?
- Does this total expense include any indirect compensation received for selling or administering the plan? If not, why aren't those fees included?
- How much is the indirect compensation and what is the frequency?
- How much has this cost employees over the life of their 401(k)s?
Asking your employer to provide the answers to these sticky questions probably won't make you the most popular employee on the block, but in the long run, getting this information in advance of the regulations taking affect could save everybody grief.