Feds: Half of firms don’t know what they’re paying for 401(k)s
When it comes to what their companies are paying in terms of 401(k) fees, most companies appear to be completely in the dark.
That’s a major finding in a recent report by the nonpartisan Government Accountability Office (GAO).
Take investment management fees. Around half of plan sponsors didn’t know they or their employees paid investment management fees (fees paid to managers who pick how 401(k) funds are invested) – or they mistakenly thought those fees were waived.
Why is this so important? Investment management fees account for the majority of overall 401(k) fees.
One of the major reasons why employers are unclear about the details of their fees: Most fail to ask their providers about these things.
The report found that 70% of plan sponsors had never asked whether their plan was charged 12b-1 fees, the charges that range from brokers selling funds to advertising and promotion costs. Another 82% didn’t ask about recordkeeping fees – charges for services like maintaining employees’ accounts.
To view the complete GAO report, click.
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