Sure, you can look up the Expense Ratio for any of the funds in your 401(k), but that won’t tell you the whole story.
Unfortunately, there’s no law on the books right now that require your employer to periodically disclose the fees your 401(k) charges you for
- transaction fees and sales charges
- management fees, “recordkeeping”, report requests, toll-free inquiry charges
- individual service fees
- marketing fees (”12B-1″ fees)
When you ask your employer about these fees, it’s likely your employer doesn’t even know all the answers. Sometimes the employer picked a plan administrator without full knowledge of these fees. It takes some digging through your plan’s Summary Plan Description, the plan’s Annual Report, and your account statement. Here’s what’s infuriating: there’s no law that says you have to be provided these documents until after you enroll in the plan.
Your financial planner should help you dig to the bottom to uncover these fees so you can find out how good your 401(k) really is. Remember, a 1% fee can cost a 401(k) — after 35 years of siphoning off part of your earnings — 28% of your account balance.
More information from the US Dept of Labor: LINK
Mike Dayoub is a fee-only planner in Alpharetta/Milton. 770 361-3139 website
