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The Raging Debate Over 401(k) Fees

Wall Street Journal

It’s retirement wonk versus retirement wonk.

Americans pay so much in 401(k) fees that they could buy a house with the money?
Not so fast, retorts the American Society of Pension Professionals & Actuaries.
Earlier last week, Demos, a social-issues think tank calling for an overhaul of the 401(k) system, said that 401(k) fees could cost almost $155,000 over 40 years for a two-earner family, and eat up 30% of their account balances.
But the pension actuary group quickly responded with a press release that takes issue with the assumptions that Demos used regarding fees. The group assumed a stock-index fund ratio of 0.95%, described as the year-ended weighted average of the expense ratios and annualized loads for individual funds for 2010.
Had Demos used the expense ratios “for common index funds, their calculations would have resulted in significantly lower fees,” the actuaries say. They cite Vanguard 500 Index fund investor shares as having a 0.17% expense ratio as of April 26, and Fidelity Spartan 500 index fund shares as having a 0.07% expense ratio as of April 30.
Demos also makes the assumption that trading fees are equal to the expense ratio.