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.


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