Sen. Herb Kohl (D-Wis.), chairman of the Senate Special Committee on Aging, held a hearing on Wednesday to discuss the impact hidden fees in 401(k) plans can have on investors’ retirement savings.
He, along with Sen. Tom Harkin (D-Iowa), is also preparing a bill on the subject, the Defined Contribution Fee Disclosure Act of 2007. It would require fund administrators to disclose fees not only to sponsors but also to investors.
“I believe there is a basic right for consumers to clearly know how much products and services are costing them,” Kohl said. “Disclosure is especially important in the case of 401(k)s, as the slightest difference in fees can translate into a staggering depletion in savings, greatly affecting one’s ability to build a secure retirement.”
The AARP found, in a survey, that only 17% of plan participants realize they are paying fees. Sixty-five percent thought they were paying no fees at all.