Where to find the fees charged by your 401(k) retirement funds?
"Sorry to say there isn't an easy answer to where to find all expenses on retirement accounts, which is definitely part of the problem," says Jennifer Erickson, co-author of a new study of 401(k) fees by the Center for American Progress.
Your quarterly statement may not show all the fees and "can be even more confusing," Erickson says.
Most fees —more than 80 percent of them — are covered by a plan's "expense ratio." The expense ratio includes recurring fees you're charged when you invest in a fund. The ratio is disclosed in a document — form 404(a)(5) — sent annually to participants in 401(k) plans.
The expense ratio appears as a percentage of assets. It's also shown as an annual dollar amount for every $1,000 you invest. But the $1,000 figure can be misleadingly low. It doesn't illustrate how fees pile up year after year as you put more money into the plan.
For example, a 1 percent expense ratio comes out to $10 per $1,000 invested. Yet as you contribute more money and your investment grows over several decades, that 1 percent will likely add up to tens of thousands of dollars.