Miller, Andrews Introduce 401(k) Fee Disclosure Bill

Legislation about full fee disclosure was introduced in the U.S. House.

An announcement on the Education and Labor Committee’s Web site said the 401(k) Fair Disclosure for Retirement Security Act of 2009 (H.R. 1984) will help workers shop around for the best retirement options by requiring simple fee disclosure of the investment options contained in their employer’s 401(k) plan.

Specifically, according to the announcement, the 401(k) Fair Disclosure for Retirement Security Act of 2009 would:

  • ensure that workers receive basic investment information, including information about risk, return, complete fees, and investment objectives before signing up for a plan;
  • require that all fees—in one number—that are charged against a workers account to be included in the account holder’s quarterly statement;
  • require service firms to tell employers the fees workers’ are charged on all investment options in four categories: administrative fees, investment management fees, transaction fees, and other fees;
  • 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 that violate them.

A similar bill (H.R. 3185) was approved by the committee in April 2008 (see “Miller Fee Bill Clears House Committee). Legislation about fee disclosure was also introduced in the Senate in February (see “Fee Disclosure Bill Introduced in Congress).