If you have a 401(k), 403(b) or 457 plan, you may be losing money to overpriced investments and hidden costs. The good news? If you understand the fees you’re paying, you may be able to lower them.
If you haven’t looked closely at the details of your plan lately, now is a good time for a checkup.
Here are a few misconceptions and details to keep in mind when it comes to employer-sponsored retirement plan fees.
Misconception 1: My plan doesn’t have any fees.
All plans have fees. Investment management fees pay financial professionals to manage the investments available through the plan, such as mutual funds. Administrative fees pay for tasks such as issuing statements, running the employees’ account management website and providing customer service.
Misconception 2: My employer pays my plan’s fees.
While the costs may be shared, it's likely that most employees are paying for the bulk of the fees associated with their account. Note: Your employer has to disclose fee information annually, including details about how much is being deducted from your account for the expenses mentioned above.
Misconception 3: I can’t do anything about my plan’s fees.
You may have more control than you think. For example, you can do a little research and choose the investments within your plan that have the lowest fees (while also taking your goals and risk tolerance into account).
You have little control over administrative fees, but you can try to lobby your employer for lower fees if you discover they’re unreasonable.