Who pays to run your 401k plan? Likely you do. There are two types of costs. The fees to run the plan; those are record keeping fees and then there are the fees associated with the investment funds.
Sometimes record keeping fees are a set amount per participant and other times they are stated as a percentage of assets.
Do you know how much of your savings goes to fees? Check out the full story below.
SUPPOSE YOU walked into a restaurant and they handed you a menu without prices. Would you conclude that: (a) everything is free; or (b) something funny is going on? I doubt anyone would choose the first option. It defies logic. Yet this is how the 401(k) industry routinely operates—and large numbers of people are falling for it.
According to a 2018 survey by TD Ameritrade, 37% of 401(k) participants mistakenly believe that their 401(k) retirement plan is a free employee benefit—that it carries no fees. Another 22% aren’t sure whether or not their plan costs anything. And among the minority who understand they’re paying something, one third don’t know where to find the information. Just 27% of all participants actually know what they’re paying. By contrast, the survey found that 96% of consumers know exactly what they pay for inexpensive services like Netflix.
Source: No Free Lunch – HumbleDollar
