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Caution: 401(k) Fees May Be Hazardous To Your (Financial) Health

Caution: 401(k) Fees May Be Hazardous to Your (Financial) Health

The Federal Cigarette Labeling and Advertising Act of 1965 (Public Law 89-92) was enacted to require tobacco manufacturers to place warning labels on their cigarette packages. The required warning at the time was “Caution: Cigarette Smoking May Be Hazardous to Your Health” and it was placed in small print directly on cigarette packages. While the long-term effectiveness of such warnings remains subject to debate, these warnings (if buyers saw them) were the first indication to many smokers at the time that cigarettes could be bad for their health.

In similar fashion, though fashionably late, Congress and the Department of Labor are now requiring 401(k) providers to disclose the fees they charge to plan participants. So beginning in 2012–for the first time since Congress laid the groundwork enabling these plans way back in 1974–all of your 401(k) fees are now revealed…sort of.

As it turns out, the much-hyped new retirement plan disclosures didn’t completely solve the 401(k) fee dilemma. A 2013 study by LIMRA* (a global association of insurance and financial services companies) found that roughly half of 401(k) participants remain unaware of how much they’re paying in fees–results not much different than before the new regulations took hold last year. However, some progress has been made. The same study also indicated that only 22% of participants now believe they aren’t charged anything for their plan–down significantly from the 38% who held that belief prior to the disclosure requirements. This indicates that the new disclosures are at least somewhat effective to those who can make sense of them–but they’re probably still confusing to many investors.

Why is 401(k) fee information so hard to decipher? Not surprisingly, many of the large companies that provide these plans are testing the regulatory waters. They’re disclosing fees on account statements in less-than-transparent ways, making it extremely difficult even for their own employees to figure them out. That said, the information is now available and can be deciphered with the right help.

If your 401(k) fee disclosures still look like a foreign language to you, get assistance. Talk to your human resources representative, and consult with your RegentAtlantic Wealth Advisor to get a better understanding of how your 401(k) and its fees are impacting your financial health. After all, information is power. The new disclosure rules should arm plan sponsors and participants alike with the data they need to become better-informed consumers. Participants should speak up if they don’t believe they’re getting a good value.

There’s no reason to fall victim to high-cost 401(k) plans. We all have a wealth of better options, and now we can see them more clearly.

 

 

 

Important Disclosure Information

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This discussion is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

The information in these written materials is only offered for purposes of providing investment education and should not be relied upon as investment advice as defined under the Employee Retirement Income Security Act of 1974 (“ERISA”). RegentAtlantic and its representatives do not intend to be a fiduciary for purposes of ERISA in the delivery of these written materials or in the delivery of any verbal presentation of such materials.

*http://www.limra.com/Posts/PR/News_Releases/LIMRA__Mandated
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Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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