Ron Lieber’s “Shedding Light on Excessive 401(k) Fees” (New York Times, June 3, 2011) provides a useful concise introduction to the myriad fees embedded in 401(k) and other private retirement investment plans and how they add up to substantial losses for participants.
It is important though to note that even if courts or Congress find ways to lower those fees, which of course the financial services industry will fight with its substantial resources, including lobbyists, those plans will still not produce adequate retirement security for most. Even in the best of situations with minimal fees, the same amount of money invested in traditional defined benefit pension plans would produce much more retirement security.
Traditional defined benefit pension plans have substantially lower overhead costs and fees than do 401(k) and other defined contribution plans. That combined with the nature of the approach is responsible for them performing much better for participants.
See also “401k) Open and Hidden Fees” on this site.
James W. Russell