401k Fees and Expenses

401k Fees and Expenses

Finding information about the costs of employer-sponsored defined contribution plans is difficult, because for years weak regulations have allowed the financial industry to obscure these costs and gouge millions of retirement plan participants. This has made it difficult for both employers and plan participants to understand the true costs of these retirement plans. Particularly at smaller companies where fewer people are paying attention, some of these retirement savings plans carry simply outrageous visible and hidden fees. With new US Department of Labor regulations requiring fee disclosures, we will soon have a much better understanding of these fees starting at the beginning of 2012. For information on these new regulations, see:

Investment costs of company profit sharing, ESOP, 401k, stock bonus, or money purchase pension plans

If you have investments in a company profit sharing, ESOP, 401k, stock bonus, or money purchase pension plan that has over 100 employees enrolled, you may be able to find information online about the expenses of your plan. These profit sharing, ESOP, 401k, stock bonus, or money purchase pension plans must file a Form 5500 with the Department of Labor. A firm named Brightscope.com has put this form 5500 information online. Brightscope.com says that their database contains over 55,000 plans and covers over 90% of total invested assets in company sponsored 401(k) retirement plans.

To find out about the plan expenses of any company in the brightscope.com database, you must register with brightscope.com by giving your name, an email address, and a password, and then you must confirm an automated email that is sent to your email account. Registration is free and you do not need to be affiliated with any company. You can look up any company, as if for example, you were a job seeker and wanted to understand about any company’s plan investment cost efficiency. However, make sure that you look up the company that is most important to you first, because you are limited to five free fee reports.

After you have logged into your brightscope.com account, search for a particular company by name. On the company overview page, select the “Brightscope Rating” tab near the top. Look for the little pie chart, followed by a link entitled “ Personal Fee Report” and click the link. In the “Your Fees” click “Select Investments” and add some particular investments and investment dollar amounts, and then click the “Submit Investments” tab at the bottom. Finally, click the link named “View Detailed Calculations” for a breakout of all the expenses.