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10 things

Feb. 23, 2013, 7:01 a.m. EST

10 things 401(k) plans won’t tell you

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By Elizabeth O'Brien

Continued from page 6

7. …but things are starting to improve.

The Department of Labor’s spotlight on fees has already pushed plan providers to offer lower-cost options, such as exchange-traded funds, in 401(k)s. Some, like Schwab, rolled out new offerings earlier this year, before the first disclosures came out. “This is the true trickle down,” says Mike Alfred, CEO and co-founder of 401(k) consulting firm BrightScope. So while plan participants might not take to the streets after seeing how much they’re paying for their 401(k) — disclosures are hardly going to change the prevailing apathy — their employers are getting wise to the expenses, and they’re starting to demand better options.

Indeed, companies’ awareness of 401(k) fees has increased sharply over the past five years, insiders say, and the disclosures may spur further eye-opening. Part of this awareness has come from lawsuits filed against both employers and investment firms over 401(k) expenses. Many of the lawsuits have centered on share classes, forcing plan providers to explain why they’re using an expensive share class when a lower-cost option is available.

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