Anyway you figure it, Steve Jeffers is a formidable investor. For 18 years now, the Belpre, Ohio, plant manager has been diligently stashing money in the 401(k) plan of his employer, Kraton Polymers. Thanks in part to a generous match by Kraton, the 43-year-old Jeffers has amassed almost $400,000.
Yet Jeffers didn’t have a clue what his 401(k) investments were costing him — (and neither, I wager, do you). A recent AARP study found that more than 80% of 401(k) plan participants were unaware of how much they were paying in fees associated with their company’s retirement savings plan. And what you don’t know, you can’t change.
Mutual fund returns in 401(k) plans are normally reported as net returns, meaning that fees for managing your investments are subtracted from your gains or added to your losses before calculating the annual return. Other costs, such as administrative and record-keeping fees, are often divvied up among plan participants but are not explicitly listed on individual investment statements.