On more than one occasion, we’ve worked with clients who had 401(k) plans that were hard to evaluate. Often, the real costs were not easily discerned. In many cases, we discovered that clients were paying very high fees that ate away at employees’ annual returns. Now, it will be easier for everyone to evaluate just how much they are really paying for their 401(k) plans.

Recent articles by both the Wall Street Journal (“Investors in 401(k)s to get More Details”, October 15, 2010) and the Associated Press (“Labor Dept. Releases New 401(k) Fee Disclosure Rules”), discussed new rules just released by the U.S. Labor department.

Often, investors have overlooked the impact that taxes and investment expenses have on their investments. With 401(k) plans, the data has been generally difficult to ferret out, even if one made an effort to find out what they were paying. According to the Wall Street Journal article, companies will be required to provide details about their 401(k) plans’ performance, fees and expenses starting in 2011.

According to the Journal article, “the fees and expenses associated with the funds that a worker chooses must be explained as a percentage of assets held, and also represented as a dollar amount for each $1,000 invested.” An easy-to-understand glossary of terms must also be available to help workers understand the fees, expenses and other information about their plans.

The two articles contained conflicting information about when the new disclosure rules will take affect. The Wall Street Journal said the new data will be available in 2011, while the AP article mentioned both July 2011 and January 2012 as effective dates for the new disclosures.