Class Warfare in Your 401(k)

With the impact of the DOL’s disclosure regulations now trickling down to participants and the attendant focus on fees in 401(k) plans, the debate over who should pay and what they should pay is just beginning, as outlined in a Wall Street Journal article. Plan sponsors are beginning to understand how administrative and record keeping costs are being paid for, which they will have to explain to participants, who will start seeing those fees in their statements. The question is whether everyone should pay a flat fee or a percentage of assets in their plan. But isn’t this the same argument about why high earners pay more taxes? Don’t they drive on the same roads and use the same schools? Whether a flat fee or a percentage, once the fog lifts and employers actually understand what they are paying — which could take awhile — the real debate should be around why participants pay according to the revenue sharing that the funds they select pay to the record keeper. Riddle me that, Batman.