Workers will soon get new details on 401k plans

Fees you are paying will be spelled out

Workers enrolled in company 401(k) plans soon will be receiving a more detailed version of their quarterly account statements that will show exactly where their retirement dollars are going.

New U.S. Department of Labor regulations go into effect Aug. 30 requiring employers to spell out in detail in 401(k) statements the fees workers are paying to plan managers and the rate of return they are getting on investments.

Company 401(k) plan providers, such as Vanguard and Fidelity, will have to do a lot of the work for their clients and provide a summary for each participating employee to employers by July 1.

The information being provided is not entirely new. Currently, it is spread out all over the Internet in fact sheets and in prospectuses provided by the fund for anyone who knows what to look for and is willing to dig deep enough to find it.

"What's important about this is it's the first time many plan participants will be able to see things in a simple comparative format to make informed decisions with the investments in their retirement plan," said Sandra Pappa of Buck Consultants, an employee-benefits consulting firm in Pittsburgh.

Roughly 72 million workers participate in company 401(k) plans, which have in recent years replaced many company pension plans as the primary vehicle for saving for retirement.

And while fees charged by plan providers have a direct impact on the growth of retirement accounts, some participants are not even aware they pay fees for management of the funds.

The transparency policy for 401(k) fees was set in motion in October 2010 by the Labor Department's Employee Benefits Security Administration, but the mandatory start date was delayed several times while the agency debated what information would be required.

The final regulations require companies to give workers quarterly statements detailing all the plan fees and expenses deducted from the accounts; to use standard methods of calculating expense and return information so workers can do better comparison-shopping; and to present the information in a format that is simple to understand.

"We believe this regulation will be very useful for individuals to make informed decisions with investments in their plan," said Pappa, whose consulting firm will help provide the new statements for employers with 401(k)s not managed by large fund companies.

"People don't save enough for retirement and often make uninformed decisions around how to invest those savings," she said. "We believe the new regulations will provide useful tools to make those decisions."

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