[ by Melanie Gretchen ] Congressional leaders passed legislation to ensure that 401(k) Plans provide adequate disclosures that will enable investors to scrutinize and even understand how much they are being charged for fees on 401(k) plan accounts.  It's all supposed to begin with the 2012 third-quarter account statements, as mandated by the Labor Department. Now, the question is:  Will individuals awaken to the benefits offered by these changes, or will they suffer from a push by Congress to raise revenue? The Labor Department reports that, as of June 2012, there are 483,000 individuals retirement account plans, covering 72 million participants.  Some $3 trillion in assets are held in these accounts. The Facts. Earlier this year, WSJournal reporter Kelly Greene tracked the testimony of several experts in the field who appeared before the House Ways and Means Committee.    Some facts that came to light:

• Although 66% of full-time workers participate in workplace retirement plans, with almost 3/4's of them making less than $100K a year, the large number of plans make individuals less likely to use them, according to Representative Dave Camp (R- MI).
• 1 in 4 workers would reduce, or totally eliminate, their retirement-savings plan contributions if they could no longer deduct them - the Employee Benefit Research Institute.
• If workers' ability to deduct any amount of their 401(k) contributions from taxable income were eliminated, 65% of the plan sponsors surveyed would have less desire to continue offering their 401(k) -  the Principal Financial Group.
• The U.S. government will lose an estimated $136 billion this year in revenue to tax-deferred retirement plans.

A piece written 2 months later by NYTimes columnist Gretchen Morgenson  didn't have much better luck:

• 71% of those polled by AARP last February believed that they did not pay fees on their 401(k)s.
• The greater the assets held in a plan, the lower the fees.  [C-I Note: That means, the less you make, the more you pay.]
• The last kicker for individuals: workers are subject to sponsors - i.e. employers - who aren't obligated to share the details of their fees.  Rather, they will only be required to calculate expense ratios for the investments offered in a plan, showing participants the charges per $1,000 invested.
  • While the media 401(k) expense ration was 0.78%, the ratios ranged from 0.28 to 1.38% [C-I Note: If you're making over $100,000, that cost could add up quickly.]
  • What this means for individuals is that, in most cases, employees are subject to employers' knowledge of the plans to help their employees use the disclosures to make better investment choices.

The Reality of the Situation. According to a study issued by the GAO (Government Accountability Office) in April, 50% of the sponsors surveyed either did not know if they or their participants paid investment management fees or incorrectly believed that such fees were waived by service providers.  Among plan sponsors, 29% did not know if their plans paid for trustee, legal, or audit services. What's even more incredible is that 95% of the plans surveyed by the GAO study said they had not even asked their service providers for information regarding these costs.  Brent Glading, founder of the Glading Group, said employees will have to take the reigns.

"The reality is, most of the fiduciaries of these plans don't want to do what they're supposed to do.  They say, 'It doesn't save money for the company, so why do I care?'  There has to be a groundswell from the employees."

For further details, go to [WSJ, 4/20/12] and [NY Times, 6/3/12].