The likely incoming chairman of the House Education and the Workforce Committee, Democratic Rep. George Miller of California, said he would hold hearings next year on the issue.

In a study released November 30, the Government Accountability Office recommended that Congress amend retirement security law to make it easier for participants to compare the costs of 401(k) investment options. It also called for service providers to disclose fees they earn for referrals to mutual funds and other products, and for plan sponsors to submit a fee summary to the Department of Labor.

"The information on fees that 401(k) plan sponsors are required by law to disclose is limited and does not provide for an easy comparison among investment options," the GAO wrote.

Workers are hurt by hidden costs, Miller asserts. He highlighted a portion of the report showing that small differences in fees can curb fund gains by tens of thousands of dollars.

As an increasing number of Americans rely on 401(k) plans, "it’s critical that workers’ hard-earned savings not be wasted on excessive fees," Miller said in a statement.

The business community says it supports greater disclosure, but cautions against undermining confidence in 401(k) investments at a time when most workers save too little for retirement.

"You want to be practical and thoughtful," says Lynn Dudley, vice president of retirement policy at the American Benefits Council. "The vast majority of 401(k) funds are pretty straightforward. The last thing you want to do is create an unstable environment. You could scare participants into opting out."

The investment industry is already working with the Labor Department to increase fee transparency, says David Wray, president of the Profit Sharing/401(k) Council of America. Wray welcomes congressional hearings.

"The system can stand the scrutiny," he says. "You’ll see that the fee levels are reasonable."

Congress encouraged growth of 401(k) investments by approving an automatic enrollment mechanism in pension reform law that was signed by President Bush in August. The number of participants in 401(k) plans has grown from fewer than 8 million 20 years ago to 47 million in 2005. Assets total more than $2 trillion.

The fact that Congress will hold hearings on opaque fee structures shortly after facilitating 401(k) participation is not inconsistent, according to one expert.

"There is no conflict between those two things because Congress in both cases is trying to make it easier for individuals to save and to make the decisions necessary to save in 401(k) plans," says Mark Iwry, a non-resident senior fellow at the Brookings Institution and senior advisor to the Retirement Security Project. "They’re both intended to promote savings."

For now, the 401(k) fee discussion isn’t partisan. Steve Forde, spokesman for current House workforce chairman, Howard "Buck" McKeon, R-California, says his boss "will look forward to examining this issue in greater depth.

"Under a Republican Congress, we’ve made great progress in strengthening retirement security and increasing participation in 401(k) plans," Forde says.

--Mark Schoeff Jr.