7 effective ways you can tackle high fees
Find comparisons to 401(k) fees
The Department of Labor's Employee Benefits Security Administration released a ruling to provide for transparency in employer-sponsored 401(k) plans.
Starting in late 2012, employers must provide an annual report for 401(k) items such as:
- Administrative fees.
- Investments available and investment fees.
- Historic performance.
"Because of the differences in fees, plan members and plan assets, it's still tricky assessing whether the fees associated with your particular plan are reasonable," says C. Brooks Mosley, president of Security Ballew Wealth Management in Jackson, Miss. "So we compare the expenses to assets in the plan to find an expense ratio."
For a small plan with fewer assets, about 1 percent of your total plan's assets in fees is reasonable. In a larger plan, expect to pay less than 1 percent in fees. Mosley advises that plans with matching contributions generally avoid high fees.
- Compare fees and plans, and check how those fees will affect your bottom line.
- Check your employer's quarterly and annual reports on the sponsored 401(k).