Plan sponsors gird for sticker shock with 401(k) fee disclosures

Companies that sponsor retirement plans for their employees are likely to get a rude shock next year when they finally get a look at the bill.

DOL rules that are expected to go into effect next year would increase the type and detail of required disclosures about the fees charged for retirement plan services. The Labor Department is hoping to make 401(k) fees more transparent for employee participants. But employees aren’t the only ones who are in the dark about how much plans cost.

Nearly two-thirds of the 850 mostly midsize private and not-for-profit organizations surveyed online in October said they weren’t ready for the new fee disclosure rules, which likely means they didn’t know or hadn’t calculated the costs themselves, according to retirement plan services provider Verisight Inc. The company conducted the survey with consulting firm RSM McGladrey Inc.

Their knowledge of plan costs may not be all that much better than the typical employee participant, which all organizations, regardless of size or industry, agree is very spotty, Mr. Tschider said.

The enhanced fee disclosure rules currently are scheduled to go into effect April 1 for plan sponsors and May 31 for participants, but some professional associations have asked for more time to get ready.