Fee Warning Label Posed For 401(k)s

April 11, 2014 • Ted Knutson

The liberal think tank Center for American Progress today proposed a warning label for 401(k)s and IRAs to caution workers about their savings being drained by high fees.

The label, which the center likened to the warning messages printed on cigarette cartons, would also reveal how a particular plan’s fees compare to the industry norm.

The center proposed its own version of the label:

“Higher fees can greatly reduce your retirement savings. Fees for this retirement plan are (the sponsor fills in this blank) times higher than similar low fee retirement options.”

“The message is simple. At less than 25 words, it offers investors the relevant information that they need to compare funds by showing fees as a multiple of a benchmark of known low-fee funds,” the center said.

The center said the label should be displayed on all IRA and 401(k) materials.

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1 Comment

Comments

AB401k 10 years ago

This would be great. Multiple times per month articles note that employees in big companies have access to better investment options and at lessor cost, than people who work for small companies. But why? How did this situation which is very real, begin? And why has it been accepted as "that's just how it is". On any given street some people are paying 5-10 times more in investment related costs in their 401k plan than their neighbors. Because of where they do, or do not work. It is time to stop perpetuating the myth, that has become fact, that just because a plan has many employees, or a large amount of assets in the plan, it has some privilege to benefit better investment options, at lessor cost, with more services and support provided, than a startup or small company plan. Every American worker has the same rights, and should have the same opportunity, to be able to plan for a secure and dignified retirement. If you have a 401k and have been told you don't "qualify" for a lower cost solution, understand that you do have alternatives and you and your employees can be on a path to a better outcome at retirement in a matter of weeks.

Fee Warning Label Posed For 401(k)s

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