The Bush administration pledged on Tuesday to improve fee disclosure in 401(k)s, the Associated Press reports. Beginning today, the Department of Labor’s Employee Benefits Security Administration will begin accepting ideas on how to do so from the public and the investment management industry. The deadline for comments is July 24.
Earlier this year, Congress said it might pass new laws requiring 401(k) plans to disclose fees, since current law doesn’t require them to make any comprehensive disclosure, and both the Securities and Exchange Commission and the Department of Labor responded, saying they would look into the matter.
Congress called for the new laws in the wake of a study the Government Accountability Office released in November indicating that 80% of investors don’t know what fees they are paying.
The DOL said it will study “what administrative and investment-related fee and expense information participants should consider when investing their retirement savings, the manner in which the information should be furnished to participants and who should provide that information.”
For its part, in the coming months, the SEC will invite experts to participate in roundtable discussions about disclosing fees in 401(k) plans and then issue a concept paper on the issue.
But some wonder how forthright the plans will actually be with investors. Barbara Roper, director of the Consumer Federation of America, said, “It’s a good concept, giving people simple, easily comparable information. The question is whether they’ll come up with a number that is really meaningful.”