The Takeaway: 401(k) Fees Reduce Savings by 30 Percent
Hmmm … 401(k) plans can help you save money for retirement, but they many also cost you more than you realize. According to a new study from research firm Demos, the average American couple pay nearly $155,000 in 401(k) fees in the course of building up their proverbial nest egg; wealthier couples could pay nearly $278,000. These fees can reduce 401(k) savings by an average of 30 percent.
- Administrative fees: Generally ranging from 0.2 to 0.4 percent of your account assets, according to Consumer Reports, these fees go to things like record-keeping and processing transactions.
- Investment management fees: Typically .5 to 1 percent of assets, these fees go to pay the salaries of those responsible for a mutual fund’s investments.
- Marketing or 12b-1 fees: Up to a maximum 1 percent, these fees cover the costs of advertising and selling the mutual funds in the plan.