Imagine taking a road trip with friends or family.
Chances are if you drive far enough you will have to pay a toll. We’ve all had this experience, and can assume without fear that the amount of the toll will be prominently displayed before we reach the booth and that each booth charges the same toll.
But what if the toll at each booth was different, and there was no way of knowing how much any of them might charge? How could you choose the least expensive booth? As bewildering as this scenario may seem, it has been the norm for 401(k)’s and other retirement plans for decades.
As the vehicles of 401(k)’s and other retirement plans travel down the road to retirement, they will pass many tolls. Many employees don’t even realize that they are being charged a fee, or toll, for the maintenance of their account and blithely continue unaware. Some even incorrectly assume there are no fees associated with a retirement plan, but, as we all know, there is no such thing as a free tollbooth.
All of this confusion is slated to change in 2012. With new rulings handed down from the Department of Labor (DOL), 401(k) plan providers will now be obliged to provide a full disclosure of the fees to both companies and their employees.
Finally, there will be transparency!
Don’t be surprised when you start to see the toll you have been paying, and please choose wisely. We want your road to retirement to be the one that takes you all the way and leaves you with a full wallet for retirement.
Also seen at foxbusiness.com.