Before It's Too Late: A Retirement Security Update From Assistant Secretary Phyllis C. Borzi
Hello! I’m Phyllis Borzi, Assistant Secretary for the Employee Benefits Security Administration at the U.S. Department of Labor.
Although this may come as a surprise to some of you, your employer-sponsored retirement plan isn’t free even though it may appear that way. A recent AARP study found that 71% of respondents reported that they did not pay any fees for their 401(k) plan, while less than a quarter (23%) said that they do pay fees. Less than one in ten (6%) stated that they did not know whether or not they pay any fees.
And it isn’t just individuals who are confused. A recently released GAO Report, 401(K) Plans: Increased Educational Outreach and Broader Oversight May Help Reduce Plan Fees, found that some plan sponsors faced challenges in understanding the fees they and their participants were charged.
There may be many reasons for this level of misunderstanding, but as a consumer, you are entitled to know what you’re being charged for the services you are getting. Next month, under new Department of Labor rules, companies that service your employer-sponsored retirement plan will have to begin disclosing the fees for your investments and the administrative costs associated with managing your savings plan. Your employer will then have to show you the costs of your 401(k) investments starting August 30 for most plans.
The Employment Benefits Security Administration has resources that will help you understand this information and may help you avoid paying excessive fees that could substantially reduce your account balance. We have consumer-focused FAQs that explain our new rules on disclosures about 401(k) services and investment fees, as well as a more technical fact sheet, and our publication A Look at 401(K) Plan Fees includes explanations of various fees and charges. It also includes a checklist you can use to review your plan fees.
If you have more questions, contact us using a form at the link below. We are out there working for you to enforce the law, but it is important that we help you learn as much as you can so that you too can take steps to protect your hard-earned savings.