Will you have to work an extra three years before retiring in order to overcome the drag of excessive fees in your 401(k) account?
    Will your annual retirement income be reduced by $3,100 a year because your company's 401(k) plan contains funds that charge high annual expenses?
    Are you willing to save an extra $800 a year to make up for the fact that your company has a retirement plan that incurs an extra one-half of 1 percent in costs each year?
    That's likely to be your fate unless you step up and complain about your company's expensive retirement plan, says David B. Loeper, author of "Stop the 401(k) Rip-Off!"
    "A great fraud is being perpetrated on the American public," Loeper charges. "Employees who participate in their company 401(k) plans are being charged billions in fees annually -- and no one is looking out for their best interests even though the laws say both plan sponsors and employers should be held responsible for acting in their employees' best interests."
    He gives some examples of excess costs:
    -- Fund choices that have high management fees and expensive trading costs instead of lower cost index funds.
    -- High plan expenses that range from record-keeping fees to per-head charges that are applied to the plan as a whole but not reflected in investment results, and are hidden deep in plan documents.
    -- "Wrap fees" that raise the cost of the hidden expenses by 1 to 3 percent a year.
    -- "Mortality charges" of one-half to 1 percent annually in retirement plans sold by insurance companies. Loeper notes that what is really behind these promises to pay your beneficiary at least the amount you originally invested actually involve "a very high annual fee to guarantee a zero percent rate of return after you're dead!"
    As a result, total costs in your plan could exceed 4 percent a year. And that's way too high! Loeper explains that even a small company plan, with about 25 employees, could easily set up a plan with less than 50 basis points -- one half of 1 percent – in total annual costs. That savings adds up to huge differences in your plan balance -- and your retirement lifestyle – over a 40-year working career.
    The Department of Labor, which regulates retirement plans, is proposing new regulations for cost disclosure and has created suggested sample disclosure documents. They would require clear disclosure by all service providers of all fees.
    The industry that provides these products and services is vigorously opposing this disclosure form, saying they already provide "reasonable" disclosure and that to do more would add to the cost burden on the plans. In reality, the sunlight should make it easier for employers to opt for lower-cost retirement plans for their employees.
    Under Employee Retirement Income Security Act, the employer has a fiduciary responsibility -- and thus a liability -- for the terms of the retirement plan, including not only choice of funds but also fees and costs.
    Attorneys see fertile ground for class-action suits against expensive plans. One plaintiff law firm has instigated lawsuits targeting at least 17 major corporations. That fact alone should make top management more sensitive to employee complaints about retirement plan costs.
    What can you do?
    Employees can bring these issues to the attention of management. Loeper's book provides a roadmap for employees to understand the fees and costs, to document the excesses in a presentation to management, and then to organize themselves to protest -- and, if necessary, to bring the documentation in a complaint to the Department of Labor. But that's a dangerous route for the employee who complains.
    A better solution: Urge your company to get an independent evaluation of its plan. Gallagher Retirement Services provides a "Fee Disclosure Forensic Audit" for company retirement plans of all sizes. For more information, go to www.gallagherretirement.com.
    Says Michael DiCenso of Gallagher: "In our recent audits, we have found wide ranges and disparity in fees for service rendered inside of 401(k) and 403(b) plans, as well as defined-benefit plans. Our audits are designed to help plan sponsors meet their fiduciary duties."
    Here's a final thought: Over a 40-year work life, you could forfeit more than $660,000 in retirement savings if your plan charges excess fees totaling just 1 percent a year!
    That should inspire you to check out costs in your company plan. And that's The Savage Truth!

     Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. Her new book, "The Savage Number: How Much Money Do You Make?" has just been published.