More than 70 percent of people with 401(k)s don’t realize they’re paying fees
By Naomi Karp
Last week, I got my 401(k) plan fee
disclosure notice in the mail. I almost threw it away.
A 401(k) account helps you to save
for retirement by making contributions from your paycheck. In some
plans, your employer also makes contributions. In many cases,
participants choose from among the investment options available through
the plan. The money saved in a 401(k) account, and the growth in the
account, isn’t taxed until you retire. This tax deferment helps your
retirement savings grow faster.
How will this new information help me?
The disclosure will tell you the fees
and expenses for the investment options your plan offers and how those
investment funds have performed over time. You can use the statement to
compare your options.
If you think the fees in your 401(k)
plan are too high, you can ask your employer to find more cost-effective
investment options or plan services.
Remember that fees are not the only factor in choosing 401(k) investments. Your plan may offer access to professional investment advice. If you’re thinking about rolling over your 401(k) savings into an IRA, consider that IRAs have fees, too, and those fees could be higher than your 401(k) plan fees.