Proposal on 401(k) fees to aid investors

WASHINGTON - Participants in 401(k)-style retirement plans would receive more information about the costs of those programs, a move that could help boost savings, under a rule proposed yesterday by the Labor Department.

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

The department estimated the disclosures would save participants $6.1 billion over 10 years, including $2.3 billion from lower fees as investment providers competed more on cost.

The rest of the savings would come from the time participants saved tracking down the fees.

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

Companies also would have to disclose the dollar amount each participant pays every quarter for a 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 much as 2 percent or more.

Such differences can have a huge impact during an employee's career. A 1 percentage point difference in annual fees can reduce a worker's retirement savings 17 percent over 20 years, the Government Accountability Office has estimated.