Department of Labor Announces Public Hearing on 401(k) Fees, October 1997

Washington, DC, October 17, 1997 - The Department of Labor has recently announced that it will hold a public hearing to obtain information relating to investment management, administration, and other fees charged to 401(k) plans and participants on November 12, 1997. The notice of the hearing invites interested persons to testify at the hearing and/or make written submissions relating to 401(k) plan fees. The purpose of the hearing is to assist the Department in assessing the availability of information regarding 401(k) plan fees and expenses to plan fiduciaries and participants, the extent to which plan fiduciaries and participants consider such information, and what action, if any, is necessary to address the identified problems.

In the notice, the Department stated that questions have been raised regarding whether 401(k) plans are being overcharged for certain services, whether fees charged to plans are hidden, whether plan sponsors are doing enough to protect plan participants from excessive fees, and whether participants understand what fees and expenses are being charged to their accounts. In order to address these questions, the Department has requested comments on the following:

Whether plan sponsors are given sufficient information to evaluate whether the fees and expenses associated with plan investments, investment options, and administrative services are reasonable;
Whether plan participants are given sufficient information associated with investment options under the plan to make informed decisions;
Whether the information regarding services, fees, and expenses disclosed to participants regarding their accounts is provided in a manner understandable by the participants;
Information regarding how services and respective fees in a bundled fee arrangement are disclosed; and
Whether the Department should take any specific actions to improve the disclosure of fees and expenses charged to 401(k) plans.

The public hearing will be held at the Department's offices in Washington and is scheduled to begin at 10:00 a.m. on Wednesday, November 12, 1997, and if necessary, on Thursday, November 13, 1997. Requests to testify at the hearing and written comments must be submitted to the Department no later than November 3, 1997.