Labor Dept. seeks better disclosure of 401(k) fees

The additional information will make it easier for employees to invest in lower-cost mutual funds and other investments, said Bradford Campbell, an assistant secretary at the Labor Department.

The department estimates the disclosures would save participants $6.1 billion over 10 years, including $2.3 billion from lower fees as investment providers compete more on cost. The rest will come from the time participants save tracking down the fees, which are currently found in a range of separate documents.

The proposal comes as 401(k)-style plans have become central to many Americans' retirement savings.

The plans, also known as defined contribution plans, allow employees to save a portion of their income in tax-deferred retirement accounts. Individuals also choose where to invest the savings, whether in a mutual fund, annuity or other type of investment.

In the past 20 years, 401(k) plans have overtaken traditional pensions, which generally pay a fixed benefit to retirees based on years of service or other criteria. Roughly two-thirds of workers with retirement benefits have 401(k) style plans, while the rest have traditional pensions.

The proposed regulation would require employers to disclose to workers the fees and expenses charged by the mutual funds and other investments in a chart or similar format.

Companies also would have to disclose the dollar amount each participant pays every quarter for their plan's administrative costs. Such costs are separate from investment costs.

On average, the fees equal about 1 percent of the amount a worker invests, according to a report last year by the Center for American Progress, a liberal think tank.

While that may not seem large, fees can vary widely, with mutual funds that track market indexes charging as little as 0.2 percent while other funds charge as high as 2 percent or more.