A new report from the Government Accountability Office shows that 401(k) plan sponsors and their employees pay more for their plans than they think. Representative George Miller (D-California), who released the report, said he's "hopeful" that the Obama Administration will take steps to mandate greater disclosure.

Our sister publication 401kWire reported yesterday on the GAO's findings.

The GAO report found that nearly six in ten sponsors either don't know if their plans charge investment-management fees or believe that these fees are waived, half don't know if their plan charges transaction fees, and 48 percent do not know if their plan has a revenue-sharing agreement with recordkeepers or other service providers. (The average plan paid 1.13 percent for recordkeeping.) The GAO surveyed 1,000 401(k) sponsors and found that 66 percent have not negotiated fees in the last five years.

The GAO's survey also found that small plans (50 or fewer employees) pay nearly 90 percent more on average than plans with 500-plus participants.

Rep. Miller, who has crusaded for years to make 401(k) fees more transparent and introduced legislation to that effect, said that "for too long, confusing business arrangements and hidden fees have skimmed money from workers' hard-earned savings," and that plan participants "do not have a fighting chance if employers don't understand how their own plan works."

Read the full report.  

Edited by: Chris Cumming


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