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Lawmakers urge fee disclosure for 401(k)s

They say most workers don't know their plans' charges.

WASHINGTON - Companies selling 401(k) services should be forced to disclose all the fees and expenses that can drain money from workers' retirement plans in writing before businesses trust them with their employees' money, the Bush administration proposed Wednesday.

The Labor Department's proposed regulation is meant to "foster fair, competitive and transparent prices for services as well as combat excessive or hidden plan fees," said Labor Secretary Elaine Chao.

Under the proposed regulation, companies offering 401(k) and other employee benefit plans would have to submit in writing all services their plan offers and all direct and indirect compensation they get from the plan. Plan providers would also have to disclose any possible conflicts of interest that could affect the plan's performance.

With 401(k) plans, employees can make tax-deferred contributions from their salaries to investment accounts. These plans have grown in popularity over the years, while traditional employer-paid pensions that guarantee a monthly benefit have waned.

Lawmakers, who also have been holding hearings on 401(k) fees, have said a 1 percentage point difference in fees can reduce retirement benefits by nearly 20 percent.

[Last modified December 13, 2007, 01:42:15]