40% of plan participants don’t know what their fees are, most of the other 60% also have no clue

Ary Rosenbaum
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

According to the Government Accountability Office (GAO), about 40% of 401(k) plan participants don’t fully understand the fees they are paying.

Even with fee disclosure rules implemented in 2012, 41% of participants incorrectly believe that they pay nothing for their 401(k) plan.

GAO found that 45% of participants are not able to use the information in fee disclosures to determine the cost of their investment fee.

The GAO has recommended that the DOL should add information to disclosure requirements, like individualized quarterly statements to show the actual cost of the investment fees; fee benchmarks to help participants better gauge if their investment costs are competitive; and investment options’ ticker information, to help participants more easily research and compare their investments. To this day, I think one of the most glaring problems is the lack of uniformity in disclosures. I always felt that the DOL dropped the ball by not offering suggested language and formats in the fee disclosure.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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