It is highly probable, that if you are not self-employed, you may have a 401(K) retirement account and chances are, that you don’t regularly keep a track of what goes on in your account. Many people don’t realize that you can be hurt financially because you end up paying way too much in the form of 401(K) fee. It has been pointed out by the government accountability office that the value you get out of your 401(K) account can be greatly reduced owing to the fee that they demand.
Reasons for high 401(K) fees
Mutual funds and variable annuities are the things that cause the fee to rise the most. Although they may seem harmless, both, variable annuities and mutual funds include you having to pay a high fee as part of the regular costs. When buying mutual funds make sure not to go in for those that have a 12b–1 fee. These have the highest fees of all. It is not difficult to find funds that are cost effective. These are very real problems regarding your 401(K), but the good news is that it can be helped.
What you can do about it
The first thing to do is avail of plans that allow you to chose your portfolio. This way, you are completely in charge and aware of exactly what it is that’s going to make up your portfolio and whether it’s an effective combination or not. It will take some research on your part, but will definitely be worth it.
Another option is to roll your 401(K) account into an IRA or a Roth IRA account. This option is open only to those whose income matches the requirements. It would be best to consult a professional before you go ahead and make this change, since there may be some hidden costs that you are unaware of.
You should make it a point to talk to the 401(K) fiduciaries. They are part of the Human Resources department and are the people responsible for picking out the investments that go into making your retirement account. They usually have the power to negotiate fees or find better investments.
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