It’s unlikely anyone saving money for retirement would describe ignorance as bliss when it comes to 401(k) fees. However, a new study of 1,000 investors by TD Ameritrade revealed that 96 percent of plan participants can tell you how much they pay for Netflix, Hulu and other streaming services. Only 27 percent know how much they’re paying in fees on their 401(k) accounts.
Among those surveyed, 37 percent are under the impression they don’t pay any fees and 22 percent have no idea whether they do or don’t. What’s more, 14 percent of retirement savers are unaware of how to find out one way or the other.
The reality is 95 percent of investors are being charged, and many—if not all—of the costs are being passed on from employer to participant.
“It can be onerous to read through all the disclosure information and documentation to understand the fees, but just because it’s hard to decipher doesn’t mean those fees don’t exist,” Matthew Sadowsky, director of retirement and annuities at TD Ameritrade, rightly notes.
But with a new tool developed through a partnership between TD Ameritrade and FeeX, it’s possible for employees to continue to take advantage of 401(k)s to their fullest while becoming more aware and empowered about their accounts.
This free online tool promises significant improvements to fee transparency, including access to fees related to 401(k), 403(b) or other defined contribution plans. Using the fee analyzer, retirement fund plan participants can quickly identify “overarching administration fees, as well as individual fees for the mutual funds within the plan, so that individuals are looking at a detailed view of their specific investment holdings and plan services fees.”
“This is a first,” Sadowsky added. “We believe TD Ameritrade is the first financial services company to provide 401(k) owners with such transparency into their plan fees, and in such an accessible, customized way.”
Jessica Claeys is an editor, writer, and graphic designer, who has been creating both print and digital marketing and communications content for 10+ years.
Jessa Claeys is a licensed insurance producer in the state of Colorado and an insurance editor for Bankrate. She currently covers auto, home and life insurance with the goal of helping others secure a healthy financial future. Jessa has over a decade of experience writing, editing and leading teams of content creators. Her work has been published by several insurance, personal finance and investment-focused publications, including BiggerPockets, 401(k) Specialist, BP Wealth and more.
