Small fees pecking away at nest eggs
TEXT OF STORY
Steve Chiotakis: No doubt 401ks have taken a beating in the economic downturn. Retirement plans have lost an estimated $2 trillion — and that’s brought more attention to the buried fees charged by 401k plans. Today, a House committee takes up legislation that would address those fees. Here’s Marketplace’s Dan Grech.
Dan GrecH: The bill would require 401k consultants and administrators to be more open about conflicts of interest and fees.
Democratic Congressman George Miller authored the bill:
George Miller: We’ve heard from people all over the country that these fees are not transparent, these fees are hidden, these fees are excessive. And that in fact you can reduce the lifetime savings of people who work for 20 or 30 years by almost 20 percent.
The bill rolls different fees into a single figure that would be displayed prominently in statements.
Jeff Acheson is with Schneider Downs, a wealth management advisory firm. He says over a lifetime, a small fee can add up.
Jeff Acheson: Dramatically — it adds up to tens of thousands of dollars in potential account value that could have been there. To the younger or larger contributor, it could easily be in six figures, the differential.
Opponents of the bill say it would make 401k plans more complex and costly and would reduce workers’ access to investment advice.
I’m Dan Grech for Marketplace.
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