The brief’s key findings are:
- Due to 401(k) rollovers, IRAs have become the biggest form of retirement savings.
- But IRAs tend to have higher fees, partly because commissions – such as 12b-1 fees – encourage broker-dealers to sell more expensive mutual funds.
- 12b-1 fees would have been eliminated under a 2010 Department of Labor reform proposal.
- This study finds that eliminating 12b-1 fees would produce only modest benefits and, despite industry concerns, would create little harm.
- Bolder reforms merit consideration, such as keeping savings in 401(k)s, extending 401(k) protections to rollover IRAs, and limiting fees in both accounts.