There is a big disconnect between employers perceptions of workers understanding of 401(k) fees and the reality, according to a survey by the Transamerica Center for Retirement Studies and Harris Interactive.
Ninety-two percent of employers said they have a clear understanding of 401(k) fees, and 73% said they believe their workers do, too. But in reality, only 29% of workers said they knew how much they were paying in 401(k) fees. Forty-eight percent said they were unaware of the fees, and 23% were not sure what they were charged.
401(k) plan sponsors are overestimating workers awareness of 401(k) fees, thereby suggesting that workers are currently receiving fee-related information in an ineffective manner, said Catherine Collinson, president of the Transamerica Center for Retirement Studies.
Of the 29% who were aware of the fees they were paying, most, 55%, found the information on the plan providers website. Forty-percent found them on printed materials mailed to their home.
As to how fee disclosure could be improved, 54% said they would like a summary of fees. The rest, 31%, would like a highly detailed account of fees and expenses. Fourteen percent had no preference. (The total does not add to 100 due to rounding.)