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How much is your 401(k) costing you?

Posted by Cheryl Costa  May 3, 2010 10:34 AM

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Do you know how much your 401(k) costs you each year in expenses?  If your answer is "I have no idea", you are not alone.  401(k)s are famous for "burying" their costs.  It is rare that you see actual fees listed on a statement (and if you do, the odds are that there are other expenses that you are also paying which are not listed.)

So, how can you check up on how much your plan is currently costing you?  A recently launched website (www.brightscope.com) lets you see exactly what kind of expenses you are incurring. 

Brightscope, a San Diego firm that launced in January 2009, currently tracks over 35,000 401(k) and 403(b) plans and is adding more everyday.  The firm bases its ratings on over 200 data points including total plan costs, the size of the company match and the quality of investment options.  Originally, HR and benefits departments used Brightscope's data to compare plan features but now plan participants have become the big users of the data.

Brightscope lists all the firms it rates alphabetically so it is easy to find your company's plan.  Top plans include AARP, Abbott Labs, FedEx, and Microsoft.  The company reports that total costs for some plans are as low as 0.20 percent while some other firms have expenses as high as 5 percent.

You can get general information about your plan without having to log into the site but if you want detailed information about the specific funds that you hold, you will need to spend a few minutes getting an account on the site and entering your holdings.  You will need a recent copy of your 401(k) statement to help with this process. 

The result is a personal 401(k) fee report.  This report provides a thorough overview of all the plan's costs and an analysis of how the fees will ultimately impact your retirement.  If your plan's fees are high, the report tells you how much you "lose" over time in excess fees and how much longer you have to work to make up the loss. Plans are rated on a scale from 0 to 100 and the average plan rating is 58.  If you get the report and don't like what you see, you can approach your benefits or HR department and lobby for plan changes.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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