“Investing is scary these days. Is it safe to go back in the stock market? Is the bond market the place to be? With so much uncertainty, how can investors know where to put their money?"

“Unfortunately, fee disclosure is still lacking for investments made through 401(k) retirement plans. The Department of Labor, which oversees the plans, is finalizing a rule that will require more disclosure by plan providers, like mutual funds, to employers. It also plans to issue further rules to ensure disclosure to employees.

“Those are moves in the right direction, though investor protections would be even more secure if enacted into law. A bill that would require fees to be clearly disclosed on investors’ statements passed the House recently as part of a larger jobs bill. But as so often happens these days, the provision was stripped in the Senate. Representative George Miller, Democrat of California and sponsor of the measure, has pointed out that it does not mandate how much providers can charge and would cost taxpayers nothing. What it would do is alert both employers and employees to the often substantial amounts that fees siphon from workers’ accounts and, in that way, give them the information they need to shop and bargain for the best deal.

“When lawmakers return from summer break, they should bring the measure up again for a vote, and pass it without further delay.”

“Rep. George Miller, a Contra Costa County Democrat who chairs a House committee that deals with pensions, wants to clarify the ever-growing world of employee-directed savings plans, especially as companies dump traditional fixed-payment pensions. He favors requiring plain-English disclosure of pension choices and a list of fees printed on periodic statements. Good as these ideas are, they were shot down in the Senate after passing the House. Score one for the power of mutual funds, which oppose the reforms.

“The Labor Department changes are still a major improvement. But they aren't bolted into legal statute the way a Congress-passed law would be, and the fee disclosures won't take effect until next summer. Miller should try again.

“The 401(k) approach is built on individuals making the best choices for their retirement. But this idea works best only if investors have all the facts. Washington needs to provide rules to help workers make the right decision.”

Some small employers say that it’s difficult to get a handle on exactly what they pay in fees, and that it often requires digging through documents or calling the various parties involved.

Gordon Maccani, chief executive of Digital Telecommunications Corp., in Van Nuys, Calif., says he thought he was paying only $3,600 a year to a third-party recordkeeper to manage his company’s 15-year-old 401(k) plan, which has about $920,000 in assets and 38 participants.

But Mr. Maccani says he recently started reviewing his annual plan statements from Transamerica Retirement Services and noticed there’s an array of other fees paid out of assets, including a 1.2% “contract asset fee,” $8,500 in “charges and fees” and about $1,400 in partner distribution fees. He originally didn’t get a clear answer, he says, when he called the company to inquire. But Transamerica called Mr. Maccani and gave him a comprehensive fee breakdown after being contacted by The Wall Street Journal. The company is a unit of Transamerica Life Insurance Co., owned by Aegon NV, a multinational Dutch insurance firm.

Transamerica’s recently provided breakdown shows Digital Telecommunications’ 401(k) plan actually paid about $16,300 in fees last year.

As 401ks continue to weaken in a rough economy, lawmakers are paying closer attention to what they can control: the buried fees. Over a lifetime, 401k fees can add up to a six-figures number.

No doubt 401ks have taken a beating in the economic downturn. Retirement plans have lost an estimated $2 trillion -- and that's brought more attention to the buried fees charged by 401k plans. Today, a House committee takes up legislation that would address those fees.

Fact: H.R. 1984 would require clear and simple fee disclosure so that workers can make sound investment decisions for themselves. The biggest problem currently facing workers with 401(k) plans is that there is too little disclosure of fees, not too much. Plan participants should be presented with the facts and then be allowed to make their own decisions.

Fact: There is no one place that 401(k) plan participants can go to find out about the fees they are paying. Information that is available is difficult to find and difficult to read. As a result, a 2007 survey by the AARP found that roughly 80 percent of plan participants were not aware how much in fees were taken out of their 401(k)s.

"There clearly has been a raid on these funds by the people of Wall Street. And it's cost the savers and the future retirees a lot of money that would otherwise be in their account, independent of the financial collapse," Rep. George Miller [D-CA] said.

Congressman Miller is chairman of the House Committee on Education and Labor, and a staunch critic of the 401(k) industry, especially its practice of deducting more than a dozen undisclosed fees from its clients' 401(k) accounts.

"Now you got a bunch of economic wizards jumping in and taking money out of your retirement plan, and they don't wanna tell you how much, you can't decipher it in simple English, and they're not interested in disclosing it, or having any transparency about it," Miller told Kroft.

"And most of the people that look at their 401(k)s have no idea that these fees are being taken out?" Kroft asked.

"No. Where would you find it? Where would you find these fees in this prospectus? You can look on any page you want, and when you're all done reading it, and you will find some of the fees and the commissions here, but you won't find them all, and I'll bet you won't find half of 'em," Miller said.

There are legal fees, trustee fees, transactional fees, stewardship fees, bookkeeping fees, finder's fees. The list goes on and on.

Miller's committee has heard testimony that they can eat up half the income in some 401(k) plans over a 30-year span. But he has not been able to stop it.

"We tried to just put in some disclosure and transparency in these fees. And we felt the full fury of that financial lobby," he said.

David Wray, a lobbyist for the 401(k) industry, says he favors disclosing the fees, but his partners in the financial industry don't.

Asked if he thinks most people know these fees exist, Wray said, "I think they know that there are fees. They don't know exactly how large they are."

"Why do you think the financial services industry is opposed to fee transparency?" Kroft asked.

"I don't know that they're opposed to it. I think the issue is that…," Wray replied.

"You don't think they're opposed to it?" Kroft asked. "You're a lobbyist in Washington, right? You know they're opposed to it. …George Miller hasn't been able to get a bill to the floor."

"I think they want to keep the systems as simple and not make changes. They like the way things are. And whenever you push people out of their comfort zones, you know, it's an issue," Wray replied.

"I mean, they're comfortable with the situation because they're making a ton of money or they have made a ton of money," Kroft said.

"Well, and their systems are set up in certain ways. You know, this is gonna be a big change," Wray replied.

Rep. George Miller (D-Calif.) believes the many fees extracted from 401(k) accounts are adding insult to injury for millions of Americans whose accounts have been decimated by stock losses and whose retirements are now in jeopardy.

Miller talks to 60 Minutes correspondent Steve Kroft for a report on how the recession is affecting 401(k) retirement plans to be broadcast this Sunday, April 17, 2009.

"There clearly has been a raid on these funds by the people of Wall Street and it has cost the savers - and the future retirees - a lot of money that would otherwise be in their accounts, independent of the financial collapse," says Miller, the chairman of the House Committee on Education and Labor. The chairman also dislikes the hidden nature of the more-than-a-dozen fees that most Americans are not fully aware are being skimmed off their 401(k)s. "And I'll bet you won't find half of them here," he tells Kroft, holding out a prospectus from a popular mutual fund found in many 401(k) portfolios.

The various fees can include legal fees, trustee fees, transactional fees, stewardship fees, bookkeeping fees, sales fees, asset management fees, investment management fees, investment advisor fees, finder's fees and many more.

Miller has been trying to curb what he considers excessive fees. "We tried to just put in some disclosure and transparency in these fees and we felt the full fury of the financial lobby," he says. (From CBSNews.com)

"The Impact of the Financial Crisis on Workers' Retirement Security"
Scheduled at 1:00 p.m. on Tuesday, October 7, 2008, in room 2175 Rayburn H.O.B.