New rules proposed for 401(k)s
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KAI RYSSDAL: The Labor Department’s had a busy day. Statisticians shared the November wholesale inflation number with us this morning. Also, the policy folks weighed in on your retirement plans, 401(k)s specifically. About 50 million of us contribute to them, but returns can vary widely, in part because of the fees we pay to plan administrators.
Today the Labor Department proposed some new rules, as Jeremy Hobson tells us.
JEREMY HOBSON: The fees pay for selecting investments and managing the 401(k) fund, and they can add up. Stephen Butler, who runs a retirement plan consulting firm, says Americans are losing billions to overblown fees.
STEPHEN BUTLER: It’s the magic of compound interest working against us when we start taking even a very small percentage out of money that could have otherwise been compounding on a tax deferred basis.
Butler says the Labor Department’s proposal is long overdue. It requires fund administrators to disclose their fees and conflicts of interest, but some say the new regulations aren’t good enough.
REBECCA DAVIS: Workers need to know what they’re paying, and with this proposed regulation we don’t have that.
That’s Rebecca Davis with the Pension Rights Center. She says the proposal only gives employers more information about the fees — not workers. But Assistant Labor Secretary Bradford Campbell says why smother employees in too many details about their 401(k)?
BRADFORD CAMPBELL: If I get a 400 page prospectus that describes all of the various information about it, I’m not as likely to read that as I would be if I got a concise disclosure that lets me choose between the options by telling me the basic facts I need.
Some industry groups say too much information could scare employees away from investing in a very important retirement fund.
In Washington, I’m Jeremy Hobson for Marketplace.
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