A guide through the complexities of 401(k) fees

Where to find the fees charged by your 401(k) retirement funds?

"Sorry to say there isn't an easy answer to where to find all expenses on retirement accounts, which is definitely part of the problem," says Jennifer Erickson, co-author of a new study of 401(k) fees by the Center for American Progress.

Your quarterly statement may not show all the fees and "can be even more confusing," Erickson says.

Most fees —more than 80 percent of them — are covered by a plan's "expense ratio." The expense ratio includes recurring fees you're charged when you invest in a fund. The ratio is disclosed in a document — form 404(a)(5) — sent annually to participants in 401(k) plans.

The expense ratio appears as a percentage of assets. It's also shown as an annual dollar amount for every $1,000 you invest. But the $1,000 figure can be misleadingly low. It doesn't illustrate how fees pile up year after year as you put more money into the plan.

For example, a 1 percent expense ratio comes out to $10 per $1,000 invested. Yet as you contribute more money and your investment grows over several decades, that 1 percent will likely add up to tens of thousands of dollars.

Among the fees some funds collect that aren't included in the expense ratio: Sales charges. These are also known as "loads" or commissions. These fees can vary from plan to plan and can be hard to find in the fund documents.

Erickson and co-author David Madland suggest asking your human resources department to help you compare fees among different plan options.

How else to minimize what you pay in 401(k) fees?

Greg McBride, chief financial analyst at Bankrate.com, suggests favoring index funds that track broad market measures, such as the Standard & Poor's 500, rather than costlier funds that actively buy and sell investments.

And McBride has another suggestion: Lobby for lower-cost options from your employer's human resources department and from the company that sponsors your employer's 401(k) plan.

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