You might say our tried-and-true way to a healthier 401k is starting to catch on – partly through the leveraging of lower fund fees. According to a recent report from the Center for Retirement Research at Boston College, a growing number of lawsuits against plan sponsors (employers) are starting to put the spotlight on hidden fees hitched to high-cost funds.
This is obviously a good thing, but just remember: Although this is leading some companies to tweak their fund offerings with lower fees, they still may not have their employees’ best interests in mind, but rather to avoid getting hit with further litigation. What’s more, because of the lack of specific guidance from the Labor Department, employers may not even know of their rules violations until the agency comes after them or they’re greeted with a lawsuit.
Of course, the fallout from increased litigation could lead to lower fund fees for many employees, but it could eventually leave an opposite impact on those with a 401k plan who work at smaller companies.
That’s because the largest plans with the most assets are usually the ones more able to negotiate lower fees, with small employers least equipped to handle the complexities of fund fees. Plus, as the threat of litigation escalates, so too could the potential threat of a discontinuation of smaller 401k plans altogether.
Fortunately, with blooom as your trusted advisor, you can rest easy knowing we’re making the most of what’s available to you by reducing fees wherever we can. We make managing your 401k simple, smart and affordable by leveraging the right funds with lower fees to optimize your retirement savings.