DRAFT Part 3: The Truth Behind 403(b) Retirement Plans

Be sure to start with our first post in this series.

What you don’t know about your 401(k) and 403(b) plan CAN hurt you.  Hidden fees can reduce your nest egg by 50% or more. 

Compounding Transaction Fees

In this post we focus on transaction costs from mutual funds offered within retirement plans.  These hidden costs stem not from the plan participants trading but from the managers of the mutual funds buying stocks or bonds for the fund’s portfolio.  They do not disclose the charges from their trades because the companies providing these plans are simply under no obligation to do so.

Mutual funds incur expenses on participants behalf when they trade.  Sometimes funds invest in other funds compounding the problem.  You won’t find an explanation of fees on the Account Statement, Mutual Fund Prospectus, Annual Report, or Insurance company.  They’re in document called Statement of Additional Information.

The house introduced 3 bills in 2007.

The House Education and Labor Committee.  The mutual fund industry prefers that things stay the way they are now.  Hidden fees for


Rube Goldberg contraption.

While this report by the U.S. Department of Labor (DOL) found at least 17 different fees that can be charged to your qualified plan, the single most common hidden fee is the Revenue Sharing fee, which can create conflicting interests between employers (or unions) who sponsor the plans and the wealth companies who manage them.

Bloomberg TV’s investigation found troubling arrangements in plans offered by Wal-Mart (managed by Merrill Lynch), Ford Motor (managed by Fidelity), and Elcon (managed by John Hancock).


Bloomberg TV Report – Part 2

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