The new fee disclosure regulations are a great first step in improving the 401(k) plans in America. Although many firms will continue to hide fees by burying the disclosures in mountains of paper. I have heard that an insurance company fee disclosure document is 42 pages (in fine print). The next step is to automatically enroll participants in a age approporaiate portfolio and then allowing the participant to opt out.

Fees charged by the financial institutions that administer these employee tax-deferred savings accounts are often a mystery. If you don’t believe this, go to the drawer where you keep your quarterly 401(k) statements and see if you can find the word “fee.”These statements give the dollar value of shares in different investments, such as mutual funds. Yet the performance of these investments is actually better because instead of stating fees, these statements give investment-return figures after fees have been taken out.

This omission is highly convenient for the large brokerages and insurance companies that provide 401(k) plans because it allows them to charge high fees, paid by investors who have no inkling of the hit their retirement accounts are taking. While these institutions must disclose all fees when asked, federal rules haven’t required them to voluntarily disclose these fees — until now.

Sweeping new rules from the U.S. Department of Labor are designed to shine a bright light on 401(k) fees. One of the requirements is a new format for quarterly statements that will show fees. The statement you receive in the fall will look nothing like the ones piled up in your drawer. It will include an eye-opening table showing fees and actual returns for each investment before fees are taken out.

Effective July 1, 2012 401(k) service providers must inform plan sponsors of all fees charged within their 401(k) plan. Effective September 1, 2012 plan sponsors must inform plan participants of these same fees. Many if not most plan sponsors have done nothing to prepare and may be deluged with questions about the fees in their plan from employees.

Please comment or call to discuss how this affects you and your company 401(k) plan.