401(k) Fee Disclosures and Small Business

A recent survey of small businesses (100 employees or less) found that more than two-thirds weren’t prepared to answer employee questions about 401(k) plan fees and more than four out of five were unsure of what to do with the fee-disclosure information they received.

The new Department of Labor rules are supposed to make plan fees simpler and more transparent.

The survey also found that plan sponsors thought 4% of plan assets was a reasonable fee to manage the plan, much higher than the actual average fee of 1% to 2%.

Employers’ misunderstanding (or ignorance) of the new disclosure rules can result in serious penalties.

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