Chances are, if you work for someone else you probably have a 401(k) retirement account. Another likelihood is that you haven’t taken a good look at that retirement account in a while. And that could mean that you are paying way more in 401(k) fees than you need to be. Indeed, the Government Accountability Office points out that 401(k) fees can reduce the value of your retirement account holdings.
Variable annuities and mutual funds
The main culprits in the 401(k) fees game are variable annuities and mutual funds. Many variable annuities come with high fees as part of the regular cost. And mutual funds are notorious for fees, especially those known as 12b-1 fees. (Note: most of the time it is possible to find mutual funds without the 12b-1 fees.) The fact of the matter is that your 401(k) might have such money-leeching investments in the portfolio. The good news is that you can do something about it.
Things you can do about those 401(k) fees
Some plans allow you to actually choose your investment portfolio for the retirement account. This means a little more work for you, but it also means that you can adjust your 401(k) so that it has fewer investments with high fees.
In some cases, though, it might not be possible to shift out of the investments with high 401(k) fees. If you meet the income requirements, you can roll your 401(k) into an IRA or a Roth IRA. There are tax considerations, and there may other costs, so carefully consider this option and maybe consult with a professional before going ahead with a rollover.
Another thing you can do is to talk to the 401(k) plan fiduciary. These are the folks in charge of choosing the investments for the 401(k) plan. You can go to human resources and find out who to talk to about the costs of your 401(k) retirement account. In many cases, these fiduciaries can negotiate lower fees, or find other investments for the plan.