A Guide to 401k Fees

Workers week after week for decades have shoveled cash into their 401(k) mutual funds, thinking they are efficient wealth generators. They didn’t know that many were overpriced losers.

Buried in the fine print were hefty account fees sucking tens of thousands out of retirement nest eggs.

A majority of Americans dependent on their 401(k) retirement portfolios didn’t know they can be charged as much as 2%, eroding returns posted in their plans over time.

Now many of them, including employees of Chevron, have filed suit, including 11 class-action lawsuits filed against 401(k) plan providers in the last quarter of 2015 alone.

These fees can substantially eat into the rate of return that participants hope to get from their investments.

For example, a 1% in 401(k) mutual fund fees charged on an annual basis over many years can reduce your plan balance by a whopping 28% at retirement.

A 2% annual fee might sound tiny, but it can eat up more than half of your earnings in 40 years.

This means that if you invest $10,000 earning 7% each year, after four decades your 401(k) retirement account would be worth $149,745. But if you’ve sunk your money into a fund that charges a 2% annual fee, you’ve cut your return by 5%.  Over 40 years, it would be worth only $70,400 — with $79,345 eaten up in fees.

These barrage of fees can include investment management fees, administration fees, sales charges and mortality and expense charges.

While new rules now compel all 401(k) plan employers to provide workers with written disclosures that list all fees, there’s no set format and some documents can be 20 to 40 pages long.

One Percent Finance recommends long-term retirement planning through diversification with tangible assets. For example, a precious metals individual retirement account (IRA) doesn’t come with any hidden 401(k) management fees. Click here To learn more about precious metals IRA’s.

For a fixed nominal annual rate, an IRS-approved custodian will look over your gold or silver in a federally approved precious metals depository.  That’s it. Your precious insured valuables are safe and secure, at less cost.

We recommend Augusta Precious Metals for your Precious Metals IRA. Augusta Precious Metals is one of the most trustworthy and reputable Gold IRA companies. For those who appreciate family owned and operated businesses, and who are looking for a personal touch, price transparency, and customization to your gold investment, Augusta Precious Metals is our top choice.