Committee on Education and Labor : U.S. House of Representatives

Press Releases

House Labor Committee Approves Bill to Expose Hidden 401(k) Fees

Wednesday, April 16, 2008


WASHINGTON, DC -- American workers would receive clear and complete information about fees that could be cutting deeply into their 401(k)-style retirement savings under legislation approved today by the House Education and Labor Committee.

By a vote of 25 to 19, the committee passed the 401(k) Fair Disclosure for Retirement Security Act (H.R. 3185), which would help workers shop around for the best retirement investment options by providing information on how much in fees is taken from their retirement accounts. Current law does not require disclosure of certain fees, and even for fee information that is available, it can be difficult for workers to find and evaluate.

“For too long, companies in the financial services industry have maintained a stranglehold on retirement savings that they didn’t earn and that don’t belong to them,” said Rep. George Miller (D-CA), chairman of the House Education and Labor Committee. “The purpose of this legislation is to take these hard-earned savings away from the special interests and return them to their rightful place – the retirement accounts of American workers. Workers are entitled to clear and complete information about their own savings.”

Miller said the issue is particularly important given that increasing numbers of American workers are relying on 401(k)s to help them pay for a decent retirement. Roughly 50 million Americans now have a 401(k)-style plan. Past surveys have shown that more than 80 percent of workers don’t know how much they are paying in fees on their retirement savings accounts.

According to the Government Accountability Office, even a seemingly small difference in the fees that workers pay can make an enormous difference in the overall size of their 401(k) account balance. A 1 percentage point difference in fees can reduce retirement benefits by nearly 20 percent.

Specifically, the version of H.R. 3185 adopted by the committee would:


  • Require 401(k) service providers and plan administrators to provide complete disclosure of fees charged on 401(k) plans broken down into four categories: administrative fees, investment management fees, transaction fees, and other fees;
  • Help workers understand their investment options by providing basic investment information, including information on risk, return, and investment objectives;
  • Require plan administrators to offer at least one low-cost index fund to plan participants in order to receive protection against liability for participants’ investment losses;
  • Require service providers to disclose financial relationships so companies that sponsor 401(k) plans can make sure there are no conflicts of interest; and
  • Give the U.S. Department of Labor the authority to enforce new disclosure rules and fine service providers who violate them.

For more information on H.R. 3185 and the effects of hidden fees on workers’ retirement savings, click here.




Contact: Aaron Albright / Rachel Racusen
2181 Rayburn House Office Building
Washington, DC 20515