It started late last year with the beginning of the class action suits involving 401(k) fees (More storm clouding forming over 401(k) fees). Then followed by the publication of the General Accounting Office 401(k) Report commissioned by Rep. George Miller, D-Cal. Th e Congressman announced that the House Education and the Workforce Committee that he was in line to chair under the new Democratic-controlled Congress should hold hearings next year to examine the “fee issue” (Shoot fired across 401(k) industry bow).
And now, it’s official. 401(k) fees have become part of the political debate. Yesterday, the House Committee which Congressman Miller now chairs held hearings on 401(k) fees. The Democrats using verbiage such as “hidden fees erode retirement savings”, and the Republicans saying more information is confusing. What’s like to emerge under the new political alignment of Congress is legislation requiring less fees and more transparency – whatever that means.
What it means will be determined, of course, by the Department of Labor (DoL) who is working on regulations for reporting of fees, expenses, and revenue sharing on Form 5500; point-of-sale disclosures; a model notice under the fiduciary provisions of the Pension Protection Act, and what’s “reasonable compensation.”
It’s something that all of us – plan sponsors and service providers – will be focused on more than ever before.