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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Is this just for 401ks? Or 403b and 457s, too? My wife has those and hasn’t received anything.
Harry Sit says
403b yes, 457 no. The regulations are under ERISA. 457 plans are not covered by ERISA.
Harry @ PF Pro says
I don’t think I received anything like this from my 401k. Maybe it has something to do with my company being taken over and us switching 401k plans starting Jan. 1. Did they send via paper/email or both?
Harry Sit says
The announcement came by email saying the document is available. The actual document is online behind the login, in the plan info section.
B Cunningham says
My 401K parallels my other investments. 80/20 stock index and bond index. According to my 401K, the fees are similar (less than one percent), but my 401K made 5.5% this year and my outside investments made 7.5! It seems there is 2% admin fees they are not disclosing!
David C says
So… it’s September 7th and my 401k plan hasn’t sent me a fee disclosure notification via email. I know they just recently (about 3 months ago) started offering to send plan documents electronically rather than thru the mail… I’m starting to wonder if something has been botched up. I don’t see anything new under the “Forms and Documents” section of their website.
I will try to send a note to ING and see what they say… maybe this info is buried in a pre-existing document somewhere. In the past though they have required me to mail them my questions for “security” reasons… 😐
James N says
I was interested to see what the statement would say.. Mine did list some administrative fees in addition to the standard mutual fund fees which we are all familiar with. None of the admin fees apply to my account though, mainly to do with people who have left the company or taken loans out.
David C says
Hmm… having Internet problems so I think my first reply did not go through.
Long story short… ING is more than happy to send me a paper copy of my disclosures, but does not provide access to an electronic PDF of the same documents. I finally found the PDFs on a (previously unknown to me) internal HR website of all places… I guess it would be too logical to have it on ING’s website eh?
Anyway, like your disclosure mine lacked administrative fees so this mini adventure has ended in disappointment.
Evan M says
Even though your fee disclosure statement did not get into specific detail about the breakdown of administrative vs. investment fees, your plan sponsor (the person at your company responsible for the retirement plan) has that information. Just like you received (or should have) a fee disclosure document in August, your plan sponsor should have received a more detailed disclosure by July 1. Known as 408(b)(2), this document will have a breakdown, and you might want to request that your company share the results of this with you. We encourage companies to write a fee memo that details this information for participants. Transparency is a good thing! There are also ways for companies to benchmark these fees to make sure that they are in-line for similar size plans.