401(k) Fees Can Cut Retirement Savings 28% for U.S. Workers
Updated
Updated · CBS New York · Jul 20
401(k) Fees Can Cut Retirement Savings 28% for U.S. Workers
3 articles · Updated · CBS New York · Jul 20
Summary
A 1-point fee gap can erase tens of thousands of dollars from a 401(k): the Labor Department says $25,000 invested for 35 years grows to $163,000 at 1.5% fees versus $227,000 at 0.5%.
Four in 10 workers do not realize they pay 401(k) fees, even though investment charges, administrative costs and optional service fees can all reduce returns.
Typical fees run about 0.3% to 0.5% for large plans, 0.5% to 1% for mid-sized plans and 1% or more for small plans, where fixed costs are spread across fewer employees.
Workers usually cannot set plan fees, but they can limit what they pay by choosing lower-cost funds and checking annual 404(a)(5) disclosures, quarterly statements or HR and recordkeepers for updates.