Half of employers with 401(k) plans that were surveyed by the GAO couldn't identify the fees they and their employees pay or mistakenly believed that investment management fees were waived.
As a result, many workers and businesses may be paying higher fees than they realize, which can make a difference in the long run for retirement savings, according to a news release about the survey; the Department of Labor estimates that just a one-percentage-point difference in fees could reduce a worker's retirement savings by 28% over the course of one's career.
Six in 10 employers said they are “completely” or “very confident” that service providers fully disclose all fees to their 401(k) plan participants, yet half of employers said they did not know whether they or their participants paid transaction or trading fees.
Meanwhile, the Government Accountability Office found that the average transaction cost was 0.45%, with one fee as high as 2.72%, according to the survey.
The survey also found that employers with smaller plans (fewer than 50 employees) paid nearly 90% more in recording-keeping fees than employers with larger plans, and paid 80% more on average for consulting services.