How to Decipher Fees in Your 401k Plan

Workers and employers use 401K plans to save for retirement. Workers invest part of their salary into the plan, and employers often contribute as well. There are fees associated with the management of a 401K plan, and investors need to be aware of the fees and expenses they are paying to keep their money in the plan. Those fees can be difficult to understand. In 2010, the Department of Labor required 401K plans to give people details on the fees they are paying for their 401K plans. Decipher fees in your 401K plan by reading all of the materials provided about your plan, or working with a financial advisor or plan representative.


  1. Image titled Decipher Fees in Your 401k Plan Step 1
    Check the 401K materials provided by your employer. When you sign up for your plan, you will be provided a packet of information.
    • Read all of the information carefully, and look for details about fees you will need to pay. There may be plan administration fees, investment fees or other service fees.
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    Read mutual fund prospectuses. When you invest in a 401K plan, you will have several funds to choose from. The fund or funds you select will have a prospectus, which is a summary of investments and a history of performance.
    • Look for a statement on fees. Fees will differ, depending on the fund you choose. Check the table of contents or index of the prospectus for the page that addresses fees.
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    Check your quarterly statements. Any fees that are deducted from your account should be listed on your statement.
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    Work with a financial adviser. Many people choose to have a financial planner or adviser manage their retirement funds. If you work with a professional, he or she can give you specifics on what fees you need to pay in your 401K, and how much they cost you.
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    Talk to your plan representative. Your employer will likely contract the 401K management out to a financial services or benefit company. When you sign up of the plan, you will be given that company's contact information.
    • Call or email your plan administrator will questions about the fees included in the 401K plan.
    • Ask your human resources representative for information, if there is no contact information provided for a third party company.
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    Use an online fee calculator. The AARP website has a 401K fee calculator, which estimates the fees associated with your individual 401K, and how they will impact your retirement savings.
    • Register for free on the AARP site. Enter an email address and password to get registered to use the calculator.
    • Provide the information on your age, 401K fund and the amount you invest on a regular basis. The calculator will allow you to compare your fees to other low-cost 401K funds.
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    Understand the different types of fees. Decipher your fees by understanding what they are, and how they are paid.
    • Expect plan administration fees. These cover the daily maintenance of your plan, including access to customer service representatives, educational tools and resources you can access and investment advice. These fees will either be a flat fee, which is a set amount charged regardless of how much money you have in your plan, or they will be a percentage of what you have in your account.
    • Watch for investment fees deducted from your account. Investment fees pay for the management of your money within the 401K plan you have. These are charged as a percentage of the assets you hold in the plan. Investment fees are often hard to decipher because they are deducted directly from your investment returns.
    • Try to avoid individual service fees. These fees are charged when you take advantage of certain options provided by your 401K plan. For example, if you decide to take a loan from your 401K to buy a house or finance education, you will need to pay a fee for that service.
    • Look for other fees specific to your plan. Some plans assess sales fees or management fees on top of the administrative fees you pay.


  • The Securities and Exchange Commission (SEC) has been reviewing the transparency of 401K and mutual fund fees. Rules and regulations are being proposed and changed often, so keep up to date on how the changes in fees may affect you and your retirement savings. Follow the news, read the information that gets mailed or emailed with your quarterly statements and ask your plan administrator for additional information.

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Categories: Retirement