The overriding intent of the Employee Retirement Income Security Act 408(b)(2) regulations is noble: Defined benefit and defined contribution pension plan providers now are required to disclose the internal costs and fees of operating 401(k) retirement plans. With this full disclosure, a self-correction of plan pricing may occur. As fees now are clearly stated, fiduciaries and plan sponsors will compare apples to apples and, I believe, shop for a less expensive plan. As a result, higher-cost plans will be replaced with lower-cost plans.
However, one of the unintended consequences - which may not become evident for a few years, but could have a dramatic and negative impact on 401(k) participants - is that these lower cost plans may compromise the level of service provided. As plans compete on price, service may take a backseat.
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