The US Department of Labor recently issued proposed rules designed to force companies that provide services to 401(k) retirement plans to spell out all the fees they charge. These regulations will go into effect in July 16, 2011. The comment period has just ended. The final rules may contain some changes. Any service provider paid more than $1,000 in compensation in connection with retirement accounts must provide detailed reports on fees, according to the new rules.
Many retirement plan participants are unaware that there could be many fees charged against their 401(k) accounts for recordkeeping, administration, investment advisory, brokerage and management services. In addition, there could be indirect fees and expenses charged. These fees are often shaved off the top of the account’s investment gains which can significantly impact the account balance over a long period of time.
All of this changes in July of 2011. Participants will know exactly how much it cost them to participate in the various options available in their employer’s 401(k) plan, and that could be an eye-opener for many. However, they will be in a position to make better informed investment choices - and reduce the impact of excessive fees on their account balances.
Remember, we are in a YOYO economy; You’re On Your Own. Watch for this information and use it for your benefit.
By IRA Technical Consultant Marvin Rotenberg and Jared Trexler
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*Copyright 2010 Ed Slott and Company, LLC
Tuesday, August 31, 2010
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