Some liken the recent fee disclosure regs and the preparation for them to Y2K – others say it has just been a big waste of paper. Regardless, it's not going away, and fees and transparency are front and center in the minds of employers and participants. The question is: How can participants really calculate how much they are paying in English, and how does that compare?
A new online tool, “Personalized Expense Ratio Calculator” (PERC), claims to help participants plan determine their costs within a 401(k) plan. The tool is designed to go beyond the DOL’s recent revisions to the 408(b)(2) and 404(a)(5) reporting requirements. Neither regulation calls for the calculation and display of a plan’s or a participant’s total plan cost. The Personalized Expense Ratio was designed to provide a more precise calculation by including investment expenses and aggregating fees from multiple service providers.
Will participants use this? Will it help them to focus on the real issue, which is that they're probably not saving enough? Or perhaps, like the 408(b)(2) and 404(a)(5) disclosures, the tool will help people to be more aware and engaged with their retirement planning. The tool was introduced this week by Lincoln Trust.
