Increased Education May Help Reduce Retirement Plan Fees

May 24, 2012 ( – A Government Accountability Office (GAO) survey and review of retirement plan documents showed some sponsors face challenges in understanding the fees they and their participants are charged.

By Rebecca Moore | May 24, 2012
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The GAO recommends the Department of Labor (DOL) develop and implement more proactive approaches to sponsor educational outreach, improve public access to annual Form 5500 data and examine the definition of a fiduciary to determine if it captures the current relationship between sponsors and providers.  

According to a GAO report, some sponsors the agency surveyed did not know if their providers used complex fee arrangements, such as revenue sharing, or if their plans paid certain fees under an insurance contract, such as a group annuity contract. In addition, some sponsors reported knowing about arrangements, but did not fully understand how these fees were charged. For example, one relatively large plan underestimated recordkeeping fees by more than $58,000, because the sponsor did not include the fees charged to participants’ accounts under its revenue sharing arrangement.  

The GAO noted that the DOL has taken several actions to help sponsors understand and monitor fees charged by service providers. For example, it disseminates a number of publications and resources, including a 401(k) fees checklist that is available to sponsors on its website to help them better understand plan fees. However, according to GAO’s survey results, more than an estimated 90% of sponsors either did not know about or have not used Labor’s resources to compare and assess plan fees.