This is interesting for its content. The only trouble I see is the lack of fiduciary responsibility that has, in part, infected the 401(k) plan itself. These fiduciaries are often not well trained in their responsibilities and some firms are simply too small to put the effort in to finding the best 401(k) plan for their employees.
These plans, as you will hear in this video dated 04.22.09 in support of the 401(k) Fair Disclosure for Retirement Security Act of 2009 and presented before Congress by Alison Borland, Retirement Strategy Leader for Hewitt Associates LLC are incredibly complicated. If they are difficult to manage in a large firm, you can only imagine how troublesome these plans must be to smaller enterprises.
Representative George Miller (CA - D) introduced the 401(k) Fair Disclosure for Retirement Security Act of 2009 that would require:
* 401(k) plan administrators to provide advance notice identifying each of the plan's investment options, along with its risk level, investment objective, historical returns, a fee comparison chart and other information
* quarterly benefit statements to disclose certain account activity information including fees assessed during the quarter
* 401(k)-style plans to include at least one lower-cost, balanced index fund in order to receive protection against liability for participants’ investment losses under ERISA Section 404(c)
* service providers to disclose to plan sponsors:
- fee information broken down into four prescribed categories
- any financial relationships or potential conflicts of interest
- the existence of different share classes and the basis for the differences
-in situations where free or discounted services are provided to the plan, the extent to which and the amount by which the service provider or its affiliates are otherwise compensated
* the DOL to provide model notices and review compliance with these requirements.
The bill is on its way to the House ways and Means Committee and so far, has not been scheduled.
Paul Petillo is the Managing Editor of BlueCollarDollar.com and a fellow Boomer.