Fees charged on 401(k) retirement accounts are so obscure that most American are under the impression that they are free!

An AARP poll published last February demonstrated that 71% of respondents believe they do not pay fees on their 401(k)’s.  An additional 6% said we not sure if fees were levied.

In fact, there are two main fees associated with 401(k) plans: investment management fees and administrative fees.  A study from Deloitte and the Investment Company Institute release last November reported that the median 401(k) expense ratio is 0.78% but has a wide range from 0.28% to 1.38%.  These fees can be justifiable if the investment performance is good, but investors need to recognize that they are definitely paying a fee.

New rules are about to take effect that will force plan sponsors to disclose the total fees or expense ratio that investors must pay.