The bulk of small business owners have trouble evaluating the fees tied to 401(k) retirement plans, reveals a new study.
A majority of the 500 owners surveyed by ShareBuilder 401k, which sells online retirement plans to small businesses, said they were confused about the costs of their 401(k)plans. Eighty-three percent had questions about all the associated fees they and their employees pay for them.
Additionally, 45% of owners deemed 4% a reasonable 401(k) plan fee rate, a Reuters article states. But according to a 2011 study by Deloitte Consulting and Investment Company Institute, the average fees paid by small businesses with less than $1 million in assets ranges from just .99% to 1.83%.
In an effort to help workers fully grasp their 401(k) plan fees, a ruling by the U.S. Department of Labor now requires employers to provide documentation of the fees their employees are charged.
But ShareBuilder 401k’s study notes that while 92% of small business owners claimed to be aware of the new rules, only 60% recalled receiving those explanatory documents. Sixty-eight percent admitted they were not prepared to answer questions from employees about the plans.
“Our survey results suggest many small business owners are still in the dark when it comes to their 401(k) plans and costs, demonstrating our industry has more work to do in disclosing fees transparently and in ways that are easy to understand,” said ShareBuilder 401k’s president Stuart Robertson.