Does Your 401(k) Cost Too Much?

The article discusses 401(k) plans. Fees can take as much as 3% of an account each year. Watch out for conflicts of interest. You can bargain-hunt for virtually any item on your personal balance sheet, from mortgages and car loans to mutual funds and brokerage accounts. But when it comes to what is probably your largest asset aside from your house--your 401(k) retirement plan--you're stuck. Stuck, that is, with the investments your company selects, no matter how expensive they may be. Since many 401(k) plans consist of relatively high-cost mutual funds and insurance products, that's generally bad news. Indeed, the average 401(k) participant in a big plan forks over 1.07% of the account balance each year, while small plan participants pay 1.4%, on average. Considering that one study pegs investment fees for the average company pension plan at just 0.28%, why are 401(k) fees so high? Over the past decade, 401(k) fees have become increasingly complex. Indeed, the fees collected from your account may be parceled out to several service providers. What can a 401(k) investor do to contain costs? Start by reexamining your plan's options, weighing fees as carefully as investment objectives.