Although workers have not been receiving itemized bills for fees they pay in their 401(k) retirement plans, those hidden costs may be chipping away at the growth of their nest eggs.

Thanks to new rules set by the U.S. Department of Labor, employees with 401(k) plans will be able to get detailed information about how much they pay in fees as of July 16, 2011.

"Buried fees are like high blood pressure," said Jeff Acheson, a partner at Schneider Downs Wealth Management in Columbus, Ohio. "You don't see it, but it will kill you.

"This new legislation will force full disclosure of what fees are embedded in a retirement plan. Once you know what they are, you can compare if they are reasonable or not and if you are getting value."

The full laundry list of direct and indirect fees that are often buried in fine print or not disclosed at all may come as a shock to retirement savers.

Labor Department officials list 17 distinct 401(k) fees being charged to retirement accounts, including fees for record keeping, legal services and toll-free telephone numbers.

It is estimated that hidden fees of 1 percent can reduce a worker's retirement returns by about 15 percent over 30 years.

For an account of $1 million, that comes to $150,000.

Indirect fees must also be disclosed under the new rules. An example of an indirect fee would be a company sending people to a conference put on by a 401(k) vendor. Vendors allocate those costs to all of its clients' customers, which is reflected in the fees each client pays to the vendor.

"With the new regulations and disclosure, people will find there were a lot of pigs at the trough," Mr. Acheson said.

Financial advisers who work with companies on the 401(k) plans will also need to spell out any possible conflicts of interest.

One example would be when an investment adviser is able to recommend two funds that are comparable but chooses the fund that pays a higher commission even though the other may have lower fees for the client.

Art Hazen, director of retirement plans for BPU Investment Management, Downtown, said the new regulations would spur radical changes within the financial services industry in terms of how major players do business.

"It will bring to light all the layers of compensation. There are a lot of different ways advisers are compensated," he said, adding that some fees have been disclosed in mutual fund prospectuses, but that most investors didn't bother to read the complicated documents.

"You'll have to do a lot less digging now," Mr. Hazen said. "Those numbers will now be on the first page in black and white as opposed to a footnote on page 26."

Sandy Pappa, a retirement adviser at Buck Consultants, Downtown, said some service providers who have followed the rules may be getting a bad rap.

Her firm works closely with service providers while helping employers review the fees its employees are paying on a recurring basis.

Buck Consultants also helps companies search for new 401(k) service providers when necessary.

"Many service providers have been disclosing many of the fees to plan sponsors," she said. "What may not have been provided is a complete disclosure of all the fees the Department of Labor is now requiring. They also may not have been provided in the most user-friendly manner."

Running 401(k) plans has been a moneymaker for big insurers and brokers because plans were layered with many hidden fees, said Jonathan Bergman, vice president of Palisades Hudson Financial Group in Scarsdale, N.Y.

He said that began to change when Caterpillar employees sued their employer in 2006, claiming it failed to fulfill its fiduciary duty because of a fee-heavy 401(k).

"That suit, which was settled for $16.5 million, was a wake-up call," Mr. Bergman said. "Many plan fiduciaries quickly re-evaluated their plans. Soon, big employers were winning fee reductions from major 401(k) vendors."

Small businesses, however, don't have the same clout, and most are stuck with high-cost plans.

According to a Deloitte Consulting survey, plans with fewer than 100 participants paid 2.03 percent in total fees on average.

"We believe this legislation may help small employers identify how plan expenses are spent," said Bob Hapanowicz, president of Hapanowicz and Associates Financial Services, Downtown.

"Companies like Heinz, U.S. Steel, PPG Industries and Verizon, because of their size, have the ability to negotiate more favorable fee arrangements with 401(k) providers," he said.

"Smaller employers with 50 to 100 workers may not have the scale to negotiate the lowest possible fee."

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