Congressional review won’t just apply to government agencies, it also will hit the private sector-and the retirement finance industry will be one of the first under the microscope, according to James Delaplane, a partner at the Washington law firm Davis & Harman.

Sometime in March, the House Education and Labor Committee likely will launch hearings on 401(k) fees. The impetus is a November report by the Government Accountability Office that called for greater transparency in fees and demonstrated how small cost increases can dramatically curb fund returns.

The report was requested by Rep. George Miller, D-California and chairman of the committee, who worries that hidden fees are eroding the savings of many Americans. Miller’s stewardship of the labor panel will be characterized by a focus on what he says are the economic hardships facing the middle class even in the midst of high corporate profits.

For 401(k) plan sponsors, this could translate into some uncomfortable grill­ing on Capitol Hill.

“They’re going to be a rough set of hearings,” Delaplane told an audience this month at the Pensions & Investments East Coast Defined Contribution Conference in Palm Beach Gardens, Flo­rida. “Hold on to your hats.”

Miller has indicated that he will be a te­nacious watchdog. “The core part of this committee is effective oversight,” he says.

The California lawmaker’s reach will extend beyond the Bush administration. The 401(k) hearings are “an example of stepped-up oversight, not just of government agencies but also of employer programs,” Delaplane says. “He’s an extremely aggressive chairman. He will be the one who defines retirement policy in the House—and it won’t always be pretty.”

An industry advocate argues that a problem with analyzing 401(k) fees is that they are charged for investment management. Parsing the value of the service can depend on how well the fund does, says Mike Barry, president of Plan Advisory Services.

A higher fee may be worth it, if a participant is receiving superior returns for his or her money. Each plan may have unique justifications for why it costs more—or less—than others.

“There’s no way to compare this apple to that apple,” Barry says.

The Department of Labor had been drafting regulations for 401(k) fees before the GAO report was issued. And fees have been the subject of numerous court cases.

Lori Lucas, senior vice president of Callan Associates, says that providers should improve fee analysis and benchmarking. Fees must be reasonable for what the plan provides—a rule that can be amorphous.

“That’s where the art and complexity of this exercise comes into play,” she says.

The 401(k) examination could result in highlighting investment management, record keeping and trustee charges in revenue-sharing agreements. Currently, in such arrangements fees are taken out of profit—and participants may not know they’re being assessed.

“Disclosure is not just about participants making better choices, but participants driving change,” Barry says.

—Mark Schoeff Jr.