401(k) fees showed up on the political radar screen in March when U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, held hearing. The blips got louder last Thursday when Congressman Miller formally introduced legislation calling for better disclosure of 401(k) fees. The legislation, called the 401(k) Fair Disclosure for Retirement Security Act of 2007, would:
- Require plan administrators to disclose, in clear and simple terms, all fees charged to plan participants each year;
- Help workers better understand their investment options by providing more detailed information on investment strategies, risks, and returns when they sign up for their company’s 401(k);
- Require 401(k)-style plans to include at least one lower-cost, balanced index fund in its investment line-up;
- Ensure that all fees and conflicts of interest are disclosed annually to employers who sponsor 401(k) plans; and
- Enhance the Department of Labor’s oversight of 401(k) plans.
The legislation’s introduction followed closely on the heels of the end of the Department of Labor’s comment period on how to better deliver information on administrative and investment fees to 401(k) participants. regulations the DOL will be adopting. The 401(k) industry is asking for time to let the DOL come out with regulations. Whether that will happen or not is now part of the Washington political process.
So buckle up. We may be in for a bumpy ride.