How to Figure Out 401k Fees

401k Box Noticed something new in your 401k statements? (Admit it: you’re only opening them now, because it’s tax season.)

You’re probably looking at a fee breakdown, the actual cost of your 401k, because plan sponsors are now required to spell out how much they are charging you for your 401k.

Surprised? Many people didn’t even realize that 401ks come with fees attached. A 2011 AARP survey of people with 401k plans found that 71% believed they weren’t paying any fees. Too many people have paid too high a price for being ignorant of these charges, says Bill Harris, CEO of Personal Capital, an online investing platform.

Let’s say you’re paying 3% in fees every year, including the expense ratio for your funds and the plans administrative costs: that could eat up a serious chunk of your potential savings by the time you retire.

Ready to be shocked? The average household is losing about $155,000 to 401k fees over the years, one study found. But you could lose even more, perhaps a third of your assets or more, depending on what you’re being charged.

As a woman, that’s the last thing you need, given that your nest egg needs to cover a longer lifespan. Plus, it’s likely that you face other challenges to your future security, like saving less, being less financially involved, or being the breadwinner (and putting family first). 

The greater transparency now required by the government can mean a lot to you. If you lower fees now, you’ll save more. 

How do you check your plan? Here are some new tools and services that can do a fee breakdown for you:

Once you know what your plan is charging, you can switch to lower-cost funds, supplement with an IRA or Roth, or ask your employer to charge less. It always pays to be in the driver’s seat.

Join the Discussion