401(k) fees revealed!

@Money July 25, 2012: 5:05 AM ET
New federal rules require clear cost disclosure of the fees you pay for your company's 401(k) plan.

New federal rules require clear cost disclosure of the fees you pay for your company's 401(k) plan.

(MONEY Magazine) -- Not sure what your retirement plan is costing you?

No wonder, since most 401(k) providers don't trumpet your fees. That changes in August, when new federal rules require clear cost disclosures for your company's plan, on average, and for your specific account.

Here's what you might see in your fall quarterly statement -- and what to make of it.

Administrative fees. Statements will show your fees (also called "reductions") for record keeping and other administrative costs, along with fees you might pay for personalized services such as a 401(k) loan. The smaller the plan, the higher your likely cost.

The details. Your statement will have an explanation of your administrative and personal fees: how they're calculated, who pays them (it could be your employer), and how often they're assessed.

Investment fees. These are costs tied to individual investments, shown as a percentage of a fund's value and as dollars per $1,000. As with mutual funds held outside a 401(k), money isn't deducted from your balance but does diminish your fund's returns.

BENCHMARKS

When it comes to fees, less is more. Here are the average expenses (investing plus administrative) as a percentage of assets for four different sizes of plans.

Biggest plans

  • Total assets: more than $1 billion
  • Average number of participants: 53,650
  • Average expenses: 0.36%

Large plans

  • Total assets: $100 million to $1 billion
  • Average number of participants: 6,324
  • Average expenses: 0.53%

Medium plans

  • Total assets: $10 million to $100 million
  • Average number of participants: 858
  • Average expenses: 0.85%

Smallest plans

  • Total assets: less than $10 million
  • Average number of participants: 42
  • Average expenses: 1.4%
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