Fees That Hurt Your 401(k) Plan Individual Investor (02/01) Vol. 20, No. 2 p.26; Kahn, Virginia Munger
In 1998, a study found that 69 percent of employers covered
100 percent of their 401(k) plan's administration and record-keeping
costs. Today, the number of employers who cover all of these costs has
been reduced to 64 percent. According to data from the Barra
RogersCasey/IOMA 2000 Annual Defined Contribution Survey, only 21
percent of employers with plans that have $1 billion or more in assets
pay all administrative costs. Since fees on 401(k) plans are seldom
revealed on quarterly or annual statements, a small number of
participants realize that they are paying for administrative fees. Ted
Benna, president of the 401(k) Association, says that all of an
employee's 401(k) fees should not be more than 1 percent of annual
assets. Employees who ask their employer to disclose all the fees paid
by a plan are often referred to confusing stacks of legal documents.
One way to determine exactly what expenses are being paid for, and by
whom, is to download a copy of "Study of 401(k) Plan Fees and Expenses"
from the Department of Labor's (DOL) Web site at
dol.gov/dol/pwba/public/pubs/401kRept.pdf. In addition to breaking down
the expenses in a 401(k) plan, participants can use the information on
the DOL site to question their employers.