Tip of the Day

Keep an eye on your retirement plan fees.

"It’s easy these days to forget about fees when your fund might have lost 40% or more in the past year,” writes the Baltimore Sun. “But fees matter over the long run, and you can end up with a lot less money, even if you’re paying what seems to be only slightly more for a fund.”

As higher fund fees can siphon even more money from employee-investors who have seen their assets battered by the downturned economy and stock market, such fee increases are something for plan sponsors to watch.

Lipper senior analyst Jeff Tjornehoj told EBN sister publication Money Management Executive that fund fees could rise 10% next year. Added to that, he warned, service providers are likely to increase their fees as well.

News You Can Use: Blind leading the blind on 401(k) fees?

Hoo, boy! From the “how-can-that-be?” files, new survey results from the Spectrem Group reveal that one in 10 plan sponsors (thankfully, a minority) believe they pay no fees for their retirement plan. If plans sponsors don’t know about these fees, how can they educate investors who need desperately to discern them to secure their retirement future? I encourage the 90% of plan sponsors who know better to coach up their naïve, uninformed peers.

Scone: DOL fee disclosure proposal step in right direction

Here's something to chew on with your morning coffee:

The Department of Labor announced Tuesday its proposal to require 401(k) plan sponsors to provide investors with summary information that includes plan fee and expenses in explicit dollar terms.

"Our proposal is consistent with public consensus that workers need clear and concise information, not dozens of pages of 'legalese,' about the investment options available under their plans, and that they would benefit greatly from having that information in a comparative format," Labor Secretary Elaine Chao said.

I wholeheartedly agree, with 'clear and concise' being the key terms. Anyone who's received a cellphone or other utility bill is familiar with the mysterious surcharges and taxes that are tacked on to what they owe. The last thing plan participants need is another line item in what can be an already confusing (and in this economy, depressing) 401(k) statement that contains vague fees -- particulary with their future economic security riding on it.

Instead, I'm hopeful that the rule -- if approved -- will yield statments more similar to the total rewards statements employers are offering in greater numbers. Where the cost of benefits are clearly communicated so that workers can see their value dollar for dollar.

Anything less is of no service to plan participants, and sponsors and plan providers may as well keep the fees hidden.

DOL currently is taking comment on the proposal. E-mail your thoughts (subject line Participant Fee Disclosure Project).