September 12, 2012 (PLANSPONSOR.com) - Eighty-three percent of small-business owners are still unclear about 401(k) fee notices and next steps, according to a survey.
The Department of Labor (DOL) fee disclosure rules put into
effect this summer were intended to make it easier for plan sponsors and
participants to understand their fees. However, the ShareBuilder 401k national
survey shows many sponsors remain confused and feel unprepared to answer
questions from employees.
Some keys findings include:
- The reports go unnoticed by many. The majority (92%) of
small-business owners claim to be aware of the new regulation requiring
providers to supply fee information, but only 60% recall receiving this
- The new reports create more confusion. Of those who did
recall receiving the documents, the average time spent reviewing was 16
minutes, and 83% were left with questions about what action to take.
Sixty-eight percent said they are not fully prepared to answer employee
questions about fees.
- Small-business owners are not ready to switch plans. More
than one-third (37%) of respondents hired or plan to hire a consultant to help
review options, and 34% have gathered or plan to gather benchmarking data. Few
business owners are using this as an opportunity to negotiate their plan with
their provider (33%) or to search for a new provider (26%).
- Many are uninformed about what is a fair 401(k) fee
percentage. Fees are usually based on a percentage of total plan assets; on
average, small-business owners said they think 4% is a fair rate, which is much
higher than the average percentage.
The ShareBuilder 401k survey was conducted by Wakefield
Research among 500 small-business owners and decisionmakers offering 401(k)
plans at companies with 100 employees or less, from August 17 and 27, using an email invitation and online