Legislation aimed at improving disclosure of 401(k) fee information was introduced in the Senate yesterday.
Sens. Tom Harkin, D-Iowa, and Herb Kohl, D-Wis., introduced the Defined Contribution Fee Disclosure Act of 2009, which would require 401(k) plan providers to disclose all fees.
“I believe there is a basic right for consumers to clearly know how much products and services are costing them,” Mr. Kohl said in a press release. “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,” he said in the release. Mr. Kohl is chairman of the Senate Special Committee on Aging.
The bill “will shed light on the 401(k) selection process and give Americans more control over their retirement future,” Sen. Harkin said in the release.
The two sponsors cited figures showing that lower management fees can boost retirement savings by thousands of dollars. Currently it is difficult for participants to determine what fees they are being charged and how those fees affect their long-term account balance, they said.
The bill would require that employers who sponsor 401(k) plans receive comprehensive information listing all fees being charged and why. That information would be passed on to participants on request. Participants would have to receive information about the overall levels of fees when they choose investment options and on their quarterly statements.
Relationships among all parties with financial interests in plans also would have to be disclosed under the legislation.