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Thursday, February 14, 2013

My 401K Isn't Free?

My 401(k) Isn’t Free?
Have you considered how fees impact your 401(k) account? A survey of employers by Congress’ nonpartisan Government Accountability Office uncovered some alarming facts, including:

  • Half didn’t know what they are paying in fees for their retirement account and,

  • A fee reduction of 1 percent of assets per year was possible and would increase the retirement account of the average worker by 28 percent.*

Do you know what you’re paying in annual fees? If the answer is no, you’re not alone. Locating and deciphering these fees has been difficult to say the least. You have to look at investments, administration, recordkeeping, trustee, advisory, trading, custodial fees, etc. Plan fees and expenses generally fall into three categories:

  • Plan Administration Fees. These fees cover such services as recordkeeping, accounting and other plan-related services.

  • Investment Fees. These fees are associated with your investments.

  • Individual Service Fees. These fees are based on account activity choices, such as processing a loan or taking a withdrawal.

It’s complicated but you can get help! There are places you can compare your fees with industry averages- like www.yearsofretirement.com. Use the calculator there to decipher some of these fees so you can better understand what you’re getting for your money. Plus your research will help you be better prepared to answer questions you may receive from your employees who also are reading about the fees associated with their 401(k) plans.

*United States Department of Labor

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