Are Your Employees Getting a Raw 401(k) Deal?

SEATTLE( TheStreet) -- New federal guidelines from the U.S. Department of Labor will require 401(k) providers to use an easy-to-understand format when disclosing all fees for plans and underlying investments.

Retirement plan fees have not been easily accessible to employers or employees and the new law is expected to be a game-changer for the 401(k)industry. It's a fair assumption that small to midsize employers -- often given less attractive pricing than large company plans -- will be switching plans to more affordable options as the fees are laid bare and their fiduciary duty to employees becomes clearer.

There are close to 500,000 small and mid-size businesses that offer a 401(k) plan. Just over 10% of businesses with fewer than 100 employees have a plan; 67% of those with 100-499 employees have a plan, and about 99% of companies with greater than 500 employees have a plan, according to Cerulli Associates data.

"Now that sponsors will have a full accounting of their 401(k) fees with fee disclosure, many could be left wondering if they are paying too much. Our goal is to make it quick and easy for employers to review their company's 401(k) plan and determine if they're getting a good deal, or should consider a change," said Stuart Robertson, 401(k) general manager at ShareBuilder 401k, a subsidiary of Capital One ( COF), which provides 410(k) plans for small and midsize businesses.

ShareBuilder 401k has introduced new tools that make it easy for companies to calculate the fees they and their employees are paying to determine whether or not those costs are reasonable.

>>>How to Use Retirement Funds to Start a Business

The first implementation deadline for plan providers is July 1, when 401(k) companies are required to send disclosure statements to all employers.

Roberston explains how the new fee disclosure regulations will impact your business.

What is the significance of the new 401(k) fee disclosures?

Robertson: The disclosure's intention is to ensure that every business owner or person running the 401(k) plan has a full understanding of all the costs and expenses for the business, but also for the employees.

Previously over half of owners either didn't understand or misunderstood the costs of their plan. Now they're going to have this really helpful document to help their fiduciary duty to run the plan in the best interests of their employees. Owners will have a clear accounting of their costs so they can determine if they have a fair priced plan or not.

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