Many industry insiders predicted that a Democratic-controlled Congress would turn its attention to 401(k) fees, and, sure enough, the first hearings on the topic took place last week. More than likely, however, the fund industry will fight legislation mandating better disclosure because if that should pressure it to lower 401(k) fees, it would put billions of dollars in annual revenue at stake.

Rep. George Miller (D-Calif.), chairman of the House of Representatives Education and Labor Committee, maintained that because fees in 401(k) plans are hidden from investors, they can be unfairly high. Expert witnesses concurred, saying 401(k) fees are typically between 3% and 5%, when they should be no more than 1.5%. "That is 1.5% to 3.5% more than is reasonably necessary," said Matthew Hutcheson, an independent pension fiduciary.

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