There are more than 50 million Americans with investments in 401(k) and other defined-contribution retirement-savings plans. They’re about to be getting more information about the fees they pay.
By one estimate, it could be sobering news.
Retirement-plan administrators have to provide detailed information to employers by July 1 about the fees they charge. Employers have to share that information with workers in their plans by Aug. 30, and once a year after that. The charges include investment-related fees and fees for administering a plan itself.
How much are the fees? A recent study by Deloitte Consulting found that the 10% of plans with the lowest costs had “all-in” fees of less than 0.87% a year; fees were more than 1.8% for the 10% with the highest costs.
Those fees add up. Over 40 years for a two-earner family, they could cost almost $155,000 and eat up 30% of their 401(k) balance, according to a model put together by Demos, a social-issues think tank calling for an overhaul of the 401(k) system.
“To put this in perspective, this household could have bought a house with the amount they paid in fees,” the report says.