Congress Speaks: 401(k) Fee Information

From a New York Times editorial today, plugging a bill under

consideration in the House on the lack of transparency with

401(k) fees:

"Under current law, 401(k) providers, such as mutual fund families or insurance companies, are not held to any consistent standard for disclosing fees. As a result, employers often have insufficient information when they make decisions about a 401 (k)'s options and services. For instance, money management firms routinely list administrative fees, which are generally paid for by employers, as "zero." But in truth, administrative costs are generally covered by charging higher investment fees, which come out of employees' account balances. The bill would require 401(k) providers to break out all costs.

The House bill would also correct current law, which does not require that employees be told about fees that reduce their investment returns. Opponents of the measure, mainly

410(k) providers, argue that more information would be more confusing."

See article linked now at

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("Better Savings Plans," Dec. 3 Editorial). Registration at the Times is free. Over some ten years, I have received no junk mail in consequence of being registered with the Times.

Reply to
Elle
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Transparency - "Yay!!!" Government regulation - "Boo!!!"

I'm glad to see a more fee transparent environment evolving. Believe it or not, some of us on the sales side WANT more transparency and have been pushing for it for years. Those of us who disclose all costs and fees are at a distinct disadvantage to those that hide theirs. Its hard for a business owner to compare plans when they don't really know about the plan they currently have. When we make a proposal to a new prospect we usually end up spending most of our time teaching them about what they already have as opposed to what we are actually offering.

I guess it partly goes back to the education/understanding/ignorance topic that has been so widely discussed here lately. If we had the education we wouldn't need gov't intervention, business owners would demand it of their plan providers.

Reply to
kastnna

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