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July 2021   Volume 19, Number 7        
 

This Just In ...

Unwelcome Surprises in Some 401(k) Plans

It pays to read the fine print on the fee disclosure documents of your company's 401(k) plan.

In 2021, the Department of Labor began requiring 401(k) providers to disclose their fees in documents called 408(b)(2) fee disclosures. The purpose was to provide transparency to plan fiduciaries and their participants.

Unfortunately, a recent study by Employee Fiduciary, LLC, a 401(k) plan provider for small businesses, revealed that three out of every four small business 401(k) plans have hidden fees. These fees cost 401(k)s an average of $228 annually. That might not sound like much, but when compound interest is considered, that's a loss of hundreds of thousands of dollars in lost returns over several decades of retirement saving.

How could this happen? These multi-page disclosures are often difficult for someone to understand unless they have 401(k) expertise. Since hidden fees can be profitable for the providers, it's in their best interest for the disclosure documents to be confusing.

Work with a broker or a financial adviser if you have questions about your plan's disclosure documents. You can also evaluate your 401(k) fees by comparing them to industry averages and/or the fees charged by competing 401(k) providers.

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In this issue:

Unwelcome Surprises in Some 401(k) Plans

SECURE Act 401(k) Plan Changes Impact Employer Responsibilities

How to Stay in Compliance with the Latest Immigration Laws

New COVID-19 Obligations Added to Group Health Plans

Unemployment Tax Rate Increases Expected

 

 


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