In a 401(k) plan, a participant’s account balance determines the amount of retirement income he/she will ultimately receive from the plan. Plan fees and expenses can substantially reduce the growth of a participant’s account.

For several months, Congress has been working on ways to increase fee disclosure and guarantee there is no conflict of interest in the investment advice given to plan participants. This way, plan advisors are truly giving plan participants the best investment advice as opposed to suggesting investments that may only be in the advisor’s best interest.

The 401k Fair Disclosure and Pension Security Act would require 401k service plan providers to disclose plan fees to sponsors and participants. Current law does not require all plan fees to be disclosed. Also under the proposed plan, only independent investment advisors could provide advice to the 401k plan participants. 

 These sweeping changes may give some financial advisors more opportunities to work with plan sponsor and participants by explaining fee schedules. But there is a downside for some commission based advisors. Since the regulation would break out every fee separately, it will be clear what the plan is paying the advisor.