Thursday, August 23, 2012

New rules mean investors will get more meaningful information on 401(k) fees

It might look like junk mail, but the envelopes heading for 70 million 401(k) owners' mailboxes in the weeks ahead are anything but.

Enclosed are figures the financial services industry might rather have kept to itself. Under new rules from the U.S. Department of Labor, which regulates retirement funds, 401(k) plans must disclose details about fees and expenses. Look at the reports closely, for they could be highly informative.

Starting with the next batch of reports on fund performance, all 401(k) participants will get precise figures on what charges are deducted from service providers, and how those costs affect participants' investment income.

Fee disclosure might not reduce that bite. It costs money to administer the accounts. But the reports will clarify the amount paid so fund trustees can shop for the best values in a competitive market. US News

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