Who’s looking out for your 401(k)? Do you know who is legally responsible for plan losses and excessive fees? Do you understand the fees being charged to your account? When was the last time you checked the fees on your 401(k)?
All too often, workers with 401(k) accounts are in the dark. They view their retirement plan as a benefit and are unaware they're paying for the privilege of investing for retirement. Many times, the 401(k) plans get neglected or pushed to the bottom of the list because the owner and Board of Directors are too busy with other tasks.
Many investors don't realize that more than a half a dozen fees may be charged against their 401(k) account for recordkeeping, administration, investment advisory, brokerage and management services. These are often shaved off the top of the account's investment returns, and never before seen by the 401(k) participants.
The Federal Government has been trying to enforce new regulations that require 401(k) plan providers to spell out the hidden fees workers pay. The push for greater disclosure has been in the works for several years, and it has been a struggle.
Unveiling investment expenses is particularly important for 401(k) participants in smaller companies. That's primarily because many companies, especially small businesses, do not want to pay the thousands of dollars of operating costs; therefore, they set up retirement plans in which costs are paid by workers out of their investment returns.
All of this discussion is critical because 401(k) participants who pay just 1 percent more in fees see a significant impact on their retirement balance over their working careers.
Revealing these costs should cause workers to push their employers for a less expensive plan. That's the takeaway for employees in all this. They should look over their reports and if they feel they're not getting enough information, push for more. If they find their fees seem higher than average, they should talk to their plan administrator about lower fee options.
At Horizons Wealth Management, we feel certain that we can provide a better retirement plan for much lower costs. We would be grateful for the opportunity to run a free cost comparison and analysis for your company to illustrate how much could be saved in your retirement plan fees.