Few Americans know how much they pay in fees for their 401(k) plan and many aren’t even aware they pay any fees, according to a new survey from TD Ameritrade. Of the 1,000 investors surveyed, only 27% knew how much they were paying in 401(k) fees and 37% thought they paid no fees at all.
The reality is far different, of course. The plans have administrative fees, investment fees for the mutual funds a participant chooses and fees for optional services such as loans — which can all affect the performance of retirement assets — and plan sponsors are required to disclose all regular expenses and fees to plan participants on a quarterly basis. Unfortunately, most people don’t read those reports.
“It can be onerous to read through all the disclosure information and documentation to understand the fees, but just because it’s hard to decipher doesn’t mean those fees don’t exist,” said Matthew Sadowsky, director of retirement and annuities at TD Ameritrade.
With that in mind, TD Ameritrade launched a free 401(k) fee analyzer tool powered by FeeX that is available to all self-directed investors. The tool provides an analysis of the fees participants pay for their defined contribution plans, including administrative fees and individual fees for the mutual funds they own in their plan.
“To have all-in costs at your fingertips online is a big deal,” says Knut Rostad,” president of the Institute for the Fiduciary Standard.