Do you know how much you are paying for your 401(k)?

The freedom of man under capitalism is an effect of competition. Ludwig von Mises

Retirement plans and the materials provided to employees can be confusing.  As confusing as it is for the employee, many employers struggle to find the fees and to understand their responsibilities.

“The service providers have figured out very creative ways to make the disclosures indecipherable to the plan sponsors, and if not indecipherable, plain out misleading,” said David B. Loeper, author of “Stop the Retirement Rip-Off: How to Avoid Hidden Fees and Keep More of Your Money” (Wiley,2009).”  http://www.nytimes.com/2010/07/24/your-money/401ks-and-similar-plans/24money.html

What is a reasonable fee?  Are there any conflicts of interest?  Is this a good plan?

Employers are expected to know this.  In fact, the Labor Department requires employers to be experts when dealing with their retirement plans.

The Labor Department is seeking to help provide more clarity.   It still isn’t enough.  Advisors, like the firms I work with, have solved this issue.

So, why is this so important?  Well, competition for these plans benefits the employees.   For example, you wouldn’t go the the bakery and pay $3 for the same doughnut you could buy for $.60.  Many retirement plans are this dramatic.

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About Christopher Hessenflow

Christopher Hessenflow is a financial planner in the Chicago area. He works with all sorts of people who are much more interesting than he is. He enjoys his career which lends him time to think and, sometimes, be creative. Chip was born bald.
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