Are you Paying 401(k) Fees You Don’t Know About?

By Heather Taylor3 Comments

If you have a 401(k) from an old job just sitting around, it might be costing you money without you knowing it. Many people aren’t aware that they’re being charged management fees on their 401(k)s and IRAs, according to a article.  

A recent national online survey of baby boomers commissioned by RebalanceIRA showed that 46 percent thought that they paid no fees at all. Another 19 percent thought the fees were likely less than 0.5 percent. Only 4 percent of the respondents thought that the fees could top 2 percent.

What’s troubling is that not only are these investors paying fees, but they can add up to tens of thousands of dollars after years or decades of the account’s existence. The average actively managed mutual fund is charged 1.3 percent in fees, according to a PBS report.

Is your retirement fund manager making the charges clear to you? According to the Financial Industry Regulatory Authority (FINRA), there are several examples out there of "overly broad language in sales material of broker-dealer firms that implies there are no fees charged to investors who have accounts with the firms."

Time for a change?
If you’ve been considering making a move to diversify your retirement portfolio or have more control over how your funds are used, this could be the final straw to jolt you into action.

Traditional IRAs and 401(k)s with mutual fund investments often have management fees, annual expenses and sales charges, according to Investopedia.

The mutual fund manager generally takes a fee for every fund you’re investing in. In some cases, you pay commissions on your gains, too.

Some of the fees pay the people who are investing your money for you. If there are types of investments that you’re comfortable making yourself, you could potentially cut out the middle man, and in turn the fees that you’re paying.

That’s where the self-directed IRA (or 401(k)) comes in. You can decide how to invest your money, and there are more investment options than you would have with a traditional IRA or 401(k). If real estate is your specialty, for example, you can use your retirement funds to invest in real estate.

By self-directing your investments, you could be saving the fee you’d pay someone else to do the work. With Equity Trust there’s no mystery about fees.  Equity Trust clients are charged one all-inclusive annual fee that’s made clear upfront.  Additional services, such as expedited processing or overnight delivery are available for a Special Service fee.

Discover if there’s a potentially better way for you to build your retirement savings. Talk to one of our senior account executives about taking control and rolling your 401(k) into a self-directed account.