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

401(k) Fair Disclosure for Retirement
Security Act (H.R. 3185)

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Increasing numbers of Americans are relying on 401(k)-style plans to help finance their retirements. Today, roughly 50 million American workers have 401(k)-style plans. The vast majority of these workers report that they do not know how much they are paying in fees to the companies that service their 401(k) plans, despite the fact that, over a career, these fees can greatly reduce workers’ retirement account balances. A 1-percentage-point difference in fees can reduce a worker’s 401(k) account balance by as much as 20 percent or more over a career.

Workers have a right to know how much they are paying in fees on their 401(k) plans so that they can make the best investment decisions for themselves. The 401(k) Fair Disclosure for Retirement Security Act (H.R. 3185), which was passed by the Committee by 25-19 on April 16, would provide workers with clear and complete information about the fees they are paying.

About the 401(k) Fair Disclosure for Retirement Security Act

H.R. 3185 would:

Require Complete Disclosure of Fees Charged on 401(k) Plans

  • Require plan administrators to disclose all fees assessed against the participant’s account, broken down into four categories: administrative fees, investment management fees, transaction fees, and other fees.

Help Workers Understand Their Investment Options

  • Require plan administrators to clearly identify the name, risk level, and investment objective of each available investment option;
  • Require plan administrators to identify historical returns for and fees assessed on each investment option; and
  • Require plan administrators to specify where plan participants can obtain additional plan and investment information.

Ensure workers have access to at least one low-cost index fund

  • 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.

Disclose Fees and Conflicts of Interest to Sponsors of 401(k) Plans

  • Require service providers to disclose to the plan sponsor the four categories of fees charged to the plan or its participants; and
  • Require service providers to outline any financial relationships or potential conflicts of interest to plan sponsors.

Enhance Department of Labor Oversight and Protection

  • Require the Labor Department to review compliance with new disclosure requirements and impose penalties for violations.

Support for H.R. 3185

Reports on 401(k) Fees

401(k) Participants' Awareness and Understanding of
Fees »

AARP, July 2007

Building 401(k) Wealth One Percent at a Time: Fees Chip Away at People's Retirement Nest Eggs »
Center for American Progress, March 2007

Testimony from March 2007 Full Committee Hearing

Barbara Bovbjerg »
Director for Education, Workforce and Income Security Issues
U.S. Government Accountability Office
Washington, D.C.

Matthew Hutcheson »
Independent Pension Fiduciary
Tigard, Oregon

Stephen Butler »
President and Founder
Pension Dynamics Corporation
Contra Costa County, CA