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).
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