401(k) Specialist Issue 4 - 2021 - 7
401(k) NEWS YOU CAN USE
4 in 10 Participants
Don't Understand
401(k) Fees
HERE'S A SHOCKER: Almost 40% of 401(k) plan participants don't
understand 401(k) fees-or know they even pay them, for that matter.
That's a key finding from a recent report by the Government
Accountability Office in response to a congressional request that the
GAO examine how well participants understand and use required
fee disclosures.
The analysis found that 45% of participants are not able to use
the information given in disclosures to determine the cost of their
investment fee-and 41% don't even know they pay fees in their
401(k) plans.
These concerning findings led the GAO to come up with a list of
five recommendations for ways the Department of Labor can help
participants better understand fees:
* Require consistent terms and measure for investment fees in
fee disclosures
* Require participants individualized quarterly statements to
show the actual cost of the investment fees
* Provide educational information about the cumulative effect
of fees
* Require disclosures to include fee benchmarks which would
help participants better gauge if their investment costs are
competitive
* Require disclosures to include investment options' ticker information,
which would help participants more easily research and
compare their investments.
Most Retirees Wait
Until RMDs to Tap
Retirement Accounts
WHEN IT COMES TO how people manage their income and spending
in retirement, it appears we've got a bunch of rule followers!
A research paper from J.P. Morgan Asset Management shows most
people aren't tapping their retirement accounts before their required
withdrawals, and even then, they're only withdrawing the minimum.
About 80% of the retirees studied didn't withdraw money from accounts
before their required minimum distributions, and about 84%
of those who reached RMD age took only the minimum amounts.
While it's good they aren't lavishly raiding their 401(k)s during the
early stages of retirement, taking out too little raises issues of its
own. Using the RMD guidance to help them distribute their wealth
in retirement isn't what that guidance was designed to do, and can
lead to retirees unnecessarily hoarding their wealth at the expense
of their quality of life.
" The RMD approach has some clear shortcomings, " the report
states. " It does not generate income that supports retirees' declining
spending in today's dollars, a behavior that we see occurs with
age. In fact, the RMD approach tends to generate more
income later in retirement and can even leave a sizable
account balance at age 100. "
ISSUE 4 2021 | 401kSpecialist.com
ONLINE
EXTRA
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401(k) Specialist Issue 4 - 2021
Table of Contents for the Digital Edition of 401(k) Specialist Issue 4 - 2021
Table of Contents
401(k) Specialist Issue 4 - 2021 - Cover1
401(k) Specialist Issue 4 - 2021 - Table of Contents
401(k) Specialist Issue 4 - 2021 - 1
401(k) Specialist Issue 4 - 2021 - 2
401(k) Specialist Issue 4 - 2021 - 3
401(k) Specialist Issue 4 - 2021 - 4
401(k) Specialist Issue 4 - 2021 - 5
401(k) Specialist Issue 4 - 2021 - 6
401(k) Specialist Issue 4 - 2021 - 7
401(k) Specialist Issue 4 - 2021 - 8
401(k) Specialist Issue 4 - 2021 - 9
401(k) Specialist Issue 4 - 2021 - 10
401(k) Specialist Issue 4 - 2021 - 11
401(k) Specialist Issue 4 - 2021 - 12
401(k) Specialist Issue 4 - 2021 - 13
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401(k) Specialist Issue 4 - 2021 - 42
401(k) Specialist Issue 4 - 2021 - 43
401(k) Specialist Issue 4 - 2021 - 44
401(k) Specialist Issue 4 - 2021 - Cover3
401(k) Specialist Issue 4 - 2021 - Cover4
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