"Money File"-401k's Hidden Costs
Wednesday, April 23, 2008SUSIE GHARIB: In the money file tonight, finding hidden fees in your 401(k). Here's Harriet Johnson Brackey, personal finance columnist at south Florida's "Sun Sentinel."
HARRIET JOHNSON BRACKEY, PERSONAL FINANCE REPORTER, SO. FLORIDA SUN- SENTINEL: What do you pay in fees for your 401(k) account? Right now you can't answer that because 401(k) accounts are loaded with hidden fees that don't have to be disclosed. This situation is wrong. The thing is, most 401(k) account owners don't even know they're paying the overhead costs of running their plan. That's because those expenses are subtracted from the accounts from your savings, but not reported to you in a line item on your statement.
Sometimes your company may not even know the true costs of the plan that it sponsors. If you think it's 1 percent, but it's really 5 percent, that heavy load will wear down your retirement to a nub. The Labor Department is proposing better disclosure rules. The House is working on a bill and there's a handful of lawsuits keeping the hidden-fee issue in the spotlight. So what can you do? Get as much information as possible from your 401(k) plan administrator. Use the Labor Department's online tool to learn what fees might be hidden in your plan and organize your coworkers to go to human resources and ask your company to get a full disclosure of fees. Only when you know what you're paying for your 401(k) account, can you decide if it's worth it. I'm Harriet Johnson Brackey.
