Final 401k Fee Disclosure Rule: 408(b)(2) Pushed Back to July 1, 2012
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EBSA (Employee Benefits Security Administration) has announced that it will push new fee disclosure regulations aimed at stopping service providers from charging excessive, hidden fees while engaging in prohibited transactions and conflicts of interests, back to July 1, 2012. The ones who will suffer from this change are the 72 million plan participants who will now have to wait even longer before they are made aware of the fees they pay in their 401k plan.
My previous post, "401k Hidden Fees: No 408(b)2 Extension Needed", discusses how industry lobbying groups were pushing for this extension, but at whose expense? The rules require companies that administer 401(k) and other defined-contribution plans to disclose administrative and investment costs to employers who sponsor the plans. Plan sponsors have 60 days from that date to disclose costs to workers saving within the plans. That pushes disclosure for plan participants to the end of August instead of May 31, 2012.
The impact of excessive fees on an employee’s retirement savings can be difference between retiring in a lifestyle you’re accustomed to or having to work several additional years instead of retiring. Paying 1% more in fees over the course of a career can result in roughly a 25% loss in retirement funds. Paying 2% more in fees can costs an employee over half of their savings effort. As a plan sponsor, business owner or trustee, don’t let this delay hinder you from exploring the fees in your plan. Click here to review the change.
About Charles Massimo
Recognized as industry expert and guest speaker at national industry conferences, Charles Massimo is a published author and media subject expert on topics ranging from wealth/asset management to investment and financial planning for high net worth families.