Sunday, January 14, 2007

Forman on Taking On 401(k) Plan Fees

Jforman_2 Jon Forman (Oklahoma) has posted to the BenefitsProf listserv his recent piece in  the January 8, 2007 issue of the Journal Record entitled: Taking on 401(k) plan fees that take away from you.

Here are some excerpts:

[T]here are many fees associated with 401(k)-plan stock funds. Companies charge fees for portfolio management, fund administration, shareholder service, and other miscellaneous costs. According to a recent report by the U.S. Congress’ Government Accountability Office, these investment fees make up between 80 and 99 percent of all plan fees, depending on the number of participants in the plan. In addition, there are record-keeping fees associated with maintaining participant accounts, processing fund selections, and mailing account statements. These, too, cut into your bottom line.

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The Government Accountability Office and the Department of Labor want Congress to amend federal pension laws to require mutual funds and 401(k) plans to provide a summary of all fees that are paid out of plan assets or by participants.

Look for Congress to enact some legislation this year, and look for all investors to benefit. Our capital markets will work better if investors have complete information about all investment and record-keeping fees.

This area of employee benefits law is an increasingly important one, especially as the number of class action suits based on unreasonably high plan fees begin to rise.  Although the current law addresses some of these issues under ERISA Section 404(c) and its regulations as far as fiduciary liability, as Jon points out, there is likely going to be more legislation introduced this year so that plan participants can more easily discover information about such fees and keep more of their retirement savings.

PS

https://lawprofessors.typepad.com/laborprof_blog/2007/01/forman_on_takin.html

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» Excessive Fees, ERISA and 401(k) Plans from Boston ERISA Law Blog
Here is an excellent article, by way of workplace prof, on the fees charged in 401(k) plans, their impact on performance, and the difficulty of even learning about them. We have talked before about how challenges to excessive fees charged... [Read More]

Tracked on Jan 16, 2007 9:00:38 AM

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