U.S. Rep. George Miller of California is probably the best friend 401(k) investors have on Capitol Hill.

He commissioned a General Accounting Office study on participant retirement readiness. He introduced the 401(k) Fair Disclosure Act, which would require service providers to describe plan fees in an unbundled fashion. But his most important legislative effort is to require all 401(k) plans to include index funds.

Many in the mutual fund industry are pushing back - probably because, if the truth were told, their assets under management would shrink.

The inconvenient truth about mutual funds is that the low-cost, generic version of a fund also is a better performer than its managed counterpart. Vanguard Group Founder John Bogle has shown that, between 1980 and 2005, an S&P 500 index fund returned 12.3% a year, compared to 7.3% for the average mutual fund.

What's more, if a plan sponsor is considering offering a managed fund to participants, the fund should be benchmarked on its 10-year track record, not just one or five years. Investors have the right to know whether a manager performed well because of the luck of a raging bull market or because of skills at stock picking.

Benchmarking a fund in a 401(k) plan can inadvertently result in churning. It's not uncommon for an employer to dump a poorly performing fund as frequently as once a year.

According to a recent Deloitte benchmarking survey, 57% of employers have changed funds within the last two years, forcing participants to sell shares and find a new fund.

If plan sponsors could only offer index funds, as is the case with the thrift savings plan that covers many federal employees, the funds would never be dumped because they are the benchmark.

The Investment Company Institute recently issued a white paper saying that the thrift plan's lower cost structure is a model for the private sector.

In his book "Supercapitalism," former Secretary of Labor Robert Reich described ERISA as "the single most complicated piece of legislation ever to be enacted, subsequently providing guaranteed livelihoods to thousands of lawyers and administrators."

Employers already pay lawyers too much to abide by this complicated and often counterintuitive law. These legal costs are often passed on to the participants.

The bottom line is we need to save 401(k) participants money by enabling them to spend less on fees. Let's start by ensuring that they have the opportunity to choose funds that can't lose.

Jane White is the president of Retirement Solutions LLC, an advocacy and educational organization dedicated to the retirement adequacy of 401(k) participants.

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