Saving for your savings

With new regulations requiring more transparency of 401(k) fees, you may want to rethink your retirement plan

If your company offers a 401(k) retirement savings plan for your employees, you're already ahead of most small-business owners.

Ninety-two percent of companies with 20 or fewer employees have no retirement solution, according to Andrew Meadows, consumer and brand ambassador at The Online 401(k),® which provides Web-based 401(k) plans to small businesses. This year, new Department of Labor (DOL) regulations will require 401(k) plan providers to be more transparent about the fees embedded in employees' 401(k) plans. These new reports, which will be published in November, are expected to make employees and employers reconsider their 401(k) plans. And for those who don't yet have a plan, it may be the perfect time to consider launching one.

According to the American Association of Retired Persons, 80 percent of people don't realize a portion of their 401(k) distributions goes toward fees for record keeping, administration, investment advice, brokerage and management services. Some plans cost employees thousands of dollars each year, according to David B. Loeper, a registered investment adviser and author of Stop the Retirement Rip-off: How to Keep More of Your Money for Retirement. If your company offers a 401(k) plan, chances are employees may experience some sticker shock when the new reports surface this fall.

"Business owners usually are not experts in retirement planning; they're too busy running their businesses," Loeper says. "Many small-business owners have been misled into purchasing 401(k) plans that are unreasonably expensive for themselves and their employees, and the new reports coming out will make this easier to determine."