Viewpoint: As 401(k) Plans Spread, Information Gap Becomes More Glaring

Financial regulation generally works on a sliding-scale principle: The less sophisticated the investor, the more protection the law provides. In the world of 401(k) plans, however, the less sophisticated the investor, the less protection the law provides.

Over objections that workers may not have the financial savvy to manage their own retirement accounts, states are stampeding to switch workers' state-guaranteed pensions to 401(k)-style plans, known as defined contribution plans, in which a worker's retirement security depends on his or her own financial acumen.

You would think that providing fund-disclosure documents to plan participants would be especially important in this context. Yet, federal law relieves mutual funds of any obligation to provide participants in 401(k) and defined contribution plans the information they would receive if they invested in the funds directly, outside of the plans. ...