Q: How do I find out how much I am paying in 401k fees?
A: If you save through a 401k, 457, or 403b plan you pay fees. However, with many retirement plans, getting a clear idea of what fees you pay is difficult. By August 30th of 2012, you should receive information from your employer that discloses the fees that you are charged if you save through a 401k or 403b plan. Unfortunately there is no such requirement for 457 plans.
Q: Why has it taken so long for service providers to be required to clearly disclose all fees?
A: It has been too hard to figure out what fees you are paying for too long. The Department of Labor solicited input over the past several years, and after delaying the deadline for disclosure, the date is finally around the corner. Retirement plan service providers must provide fee information to employers by July 1, 2012. Employers must then in turn disclose this information to employees by August 30th, 2012.
Q: How high might the fees be?
A: Unfortunately, some plan fees push up to near 3% per year. Take a look at the retirement calculator to see just how much this will hurt your retirement nest egg.
Q: What are the different fees that I may be charged?
A: The fees that you are charged may include administrative fees, mutual fund fees, custody fees, investment advisor fees, and even fees to pay a broker. These fees add up, and it is often difficult to determine just what you are paying in fees.
Q: Are high fees the only thing I should be concerned with?
A: Although the fees that you pay are important, it is also important that you have access to quality, low cost, broadly diversified investment options. Often the menu of retirement plan investment choices contains high cost mutual funds.
Q: How can I get more information about how much I am paying in fees?
A: You can ask the investment company that handles your retirement plan. However, you may need to ask the right question in the right way to get an accurate answer. If you can’t get a straight answer, or if you are finding it difficult to get and answer, you can bring this to the attention of your employer.
A: You can find more information from the following sources:
- Department of Labor at this link.
- Smart Money Magazine article about 401k plan fees.
- CBS News story about 401k fees.
- You can find information about your 401k plan at Bright Scope.