Plan participants: Are your 401(k) fees too high?

Employees who participate in their company's 401(k) plan may pay higher fees than they need to. According to a recent study, the average 401(k) plan participant pays $600 per year in fees, which can eat into retirement savings. Here are some tips for reducing those fees.

First, take a look at the fees you're being charged. Many 401(k) plans charge an annual fee, often around 1% of assets under management. In addition, there may be additional fees for features like investment advice or the use of a brokerage window. If your plan charges any of these fees, ask your HR department if lower-cost alternatives are available. 

Next, consider changing your investment mix. If your plan offers target date funds, these can be a good option for participants who want a hands-off approach to investing. Target date funds automatically rebalance over time and typically have lower expense ratios than other types of mutual funds.

Lastly, make sure you're taking advantage of any employer-matching contributions. Employers often match a certain percentage of employee contributions up to a certain limit. For example, an employer might match 50% of employee contributions up to 6% salary. If you're not contributing at least enough to get the full employer match, you're leaving money on the table.

Employees who are aware of the fees they're paying and take steps to minimize them can keep more of their hard-earned money in their retirement accounts. By taking a few simple steps, you can ensure that high fees aren't eroding your retirement savings.

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