Assessing 401k Fees and Rollover Options

401k Fees and Rollover Options

401k Fees could erode your retirement savings as much as -30% over time. 

Understanding the fees associated with your retirement accounts is typically very difficult.

But, if you don’t know or understand how much you’re paying in fees associated with different investment options, how can you know if you’re overpaying for certain funds and limiting retirement balances from increasing more fully?

Phyllis Borgi, the Assistant Secretary of Labor for Employee Benefits Security, said that she was troubled by the complex fee disclosure format that some companies have put out.

Some companies have tried to hide, confuse, or be very non-specific in their disclosure of these fees.

The U.S. Department of Labor reports 401k accounts typically charge fees of 1%–2% for administration and management fees. These fees are deducted from your retirement savings every year on the full value of your account even if your account loses value. 

Fees of 1%-2% may seem trivial, but over 20-30 years - even at just 1% - this means 20%-30% less money at retirement, and 20%-30% less income at retirement.

This could cost you hundreds of dollars each month for the rest of your life.

A 401k Rollover to a Self-Directed IRA may be an option for you, even if you are still employed with the company. 

If you are aged 59½ or older and looking to keep your retirement savings in a safe and secure, contractually guaranteed account, a fixed-indexed annuity could be a viable option.