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401(k) Fees: Workers Aren't Doing Much to Lower Them


Though we now know how much 401(k) fees are siphoning from our 401(k) plans, we don't seem to be doing much about it.

It's been a year since the Labor Department required employers that sponsor a retirement saving plan to provide more information about the expenses connected with the various investment options and administering the plan.

According to a new survey by the nonprofit Employee Benefit Research Institute (EBRI), 53 percent of defined contribution plan participants say they noticed the fee disclosures on their statements. Most did nothing. Only 14 percent who noticed the disclosures say they made changes to their portfolio as a result. Among those changes: switching out of investments with higher fees.

It's not what industry expert officials expected. They figured that once employees found out how much their retirement plans were costing them, they'd be stunned. They expected workers to pressure their employers to find plan administrators that offered lower-cost investment options.

Related: Seven Easy Ways to Boost Your 401(k)

According to some estimates, fees can erode your retirement savings by 30 percent.

The problem, according to  Forbes magazine, is that workers receive much of the new information in a vacuum. How are we to know if our plan fees are too expensive? How do we know what other 401(k) plans charge? Without comparative data on other plans' fees, how do we know if we're being asked to pay too much?

Brightscope, a service that rates 401(k) plans, has a database of plans with information on 401(k) expenses, so we can start by looking there, Forbes suggests. If you work for a large employer, CNN Money offers a free tool that shows the impact of the fees in your employer's plan.

If your employer is not in CNN Money's database, you could use a tool like to calculate the impact that a couple of percentage points in fees makes over your lifetime and see how they may impact your retirement income.

Forbes also offers this measure for comparison: the average stock fund in a 401(k) costs 0.72 percent annually while the average bond fund costs 0.52 percent.

Remember that the lower your plans' fees, the more that goes toward your retirement savings.

Photo: Ramberg Media/flickr


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