A brave new world opens up to workplace retirement savers next year.
Participants in most workplace defined contribution plans will be receiving new quarterly reports that contain clear disclosure of investment fees; in most cases, the new reports will turn up in second quarter statements. Information will be disclosed about fees being charged to the plan -- but more importantly, you'll be able to see the actual dollar amount charged to your own account.
The new reports are mandated under new
While the transparency will be great, the new disclosures pose some key questions for retirement savers. How should you interpret the new fee information? And, if the fees in your plan are too high, what can you do about it?
Nothing affects long-term retirement portfolio success more than fees. A 2010
And, while large companies often have the most efficient plans, total plan costs can vary quite a bit even among large plans, according to Brightscope, which rates 401(k) plans. Brightscope is working on updates to its website that will help investors interpret the 401(k) fees and benchmark them against the plans of similarly-sized companies and industry peers.
What can you do if the numbers suggest you're in an inefficient 401(k) plan? Start with an apples-to-apples comparison of your mutual fund options with funds you could buy on your own elsewhere. The challenge here is to get an apples-to-apples comparison, since many workplace plans offer high-cost actively-managed funds that may be difficult to compare with outside alternatives.
If your retirement plan isn't competitive, consider taking the following steps:
1. Inquire, don't complain.
"Go talk with your plan administrator, and ask some questions," suggests
"If I have
Don't be the only voice raising questions. "In these economic times, you don't want to sound like a complainer to your boss," Loeper says. "So, consider how to rally your troops. Everyone will have received these statements.(so) have a group lunch, or bring it up at happy hour: 'Hey, have you noticed how much we're paying for these funds?'"
3. Look for an open window.
Many workplace plans permit you to set up a "brokerage window" that allows you to buy and trade whatever stocks, mutual funds or Exchange-Traded Funds are offered by your plan's vendor. The privilege typically comes with an annual fee around
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