New regulations from the federal government forced 401k plan providers to give better disclosure to the plan participants about the fees they are paying. August 30 was the deadline for distributing the first disclosure. You should have received yours by now.
I read the disclosure from my plan. It confirmed that the funds in the plan don’t have any markups on top of the expense ratios listed in the information sheets everybody saw previously. That’s good.
I was hoping the new disclosure would make it clear on whether I’m paying any administrative fees, and if yes, how much I’m paying. These administrative fees were not required to be disclosed before. You had to do some detective work to find out if your plan has these hidden fees. Unfortunately the new disclosure still didn’t disclose the admin fees.
Here’s the pertinent part in the disclosure I received (emphasis added by me):
Plan fees and expenses
To support making the Plan available to you, your account may be charged (reduced by) administrative fees for recordkeeping, accounting, legal and other plan services. Some fees may be shared proportionately among all participants in the Plan. Other fees are your responsibility and typically occur when you make certain transactions. Plan administration fees and expenses may fluctuate each year and over time may substantially reduce the growth of your account.
Your quarterly benefit statement details any fees deducted from your account for the preceding quarter. You also can review any charges to your account by looking at your transaction history in the Activity section of [web site link]. Plan administrative and recordkeeping fees may be deducted from your account in the Plan proportionately based on the amount of assets held by each participant (e.g., pro-rata). Asset-based fees are charged shortly after the end of each quarter.
Individual fees based on transactions you make are charged at the time of the transaction. Outlined below are the individual fees you may be charged for transactions you request from the Plan:
- Loan Establishment Fee: $X
- Stale Check Fee: $Y
It basically says I may be charged administrative fees but I will have to wait for my next quarterly statement if I want to find out how much was charged during that quarter. The new disclosure doesn’t disclose the fee schedule for the admin fees. If some fees are charged annually after year-end, I will have to wait until I receive the quarterly statement for Q1, probably in May 2013, if I want to see how much was charged then.
"Sunlight is said to be the best of disinfectants." Although we are still not seeing the fee schedule, seeing the actual fees deducted as a line item on the quarterly statements is a very important first step. I look forward to receiving that first quarterly statement due in mid-November.
What does your 401k plan disclosure say? Does it show a fee schedule for the admin fees?
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