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The Future of 401(K) Plan Fees

New York University Review of Employee Benefits and Compensation, pp. 9-18, 2007

18 Pages Posted: 12 Feb 2008 Last revised: 16 Jul 2008

Jonathan Barry Forman

University of Oklahoma College of Law

Abstract

There were 47 million participants in 401(k) plans in 2005, up from just 8 million in the 1980s. More than 90 percent of 401(k) plan participants can choose how to invest their accounts, and nearly half invest in stock funds. That's a lot of money and a lot of investors. At bottom, the investment industry makes a very healthy living off other people's money.

This chapter considers how plan sponsors, plan participants, and government regulators can get control over 401(k) fees. At the outset, Section 2 provides an overview of the fees and costs that can arise in connection with a typical 401(k) plan. Next, Section 3 outlines the statutory and regulatory systems that regulate these costs and offers a simple example to highlight some of the major concerns about fees. Section 4 then discusses most recent developments relating to the regulation of 401(k) fees. Finally, Section 5 offers some concluding remarks about how we can get control over 401(k) plan fees and costs.

Keywords: pensions, 401(k) plans, investment fees

JEL Classification: D23, G23, H55, J14, J26, J33, J58, K31

Suggested Citation

Forman, Jonathan Barry, The Future of 401(K) Plan Fees. New York University Review of Employee Benefits and Compensation, pp. 9-18, 2007. Available at SSRN: https://ssrn.com/abstract=1092156

Jonathan Barry Forman (Contact Author)

University of Oklahoma College of Law ( email )

300 Timberdell Road
Norman, OK 73019
United States
405-325-4779 (Phone)
405-325-0389 (Fax)

HOME PAGE: http://www.law.ou.edu/faculty/forman.shtml

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