Gilfix & LaPoll Recommends Examining 401(k) Fees
Palo Alto, CA (Law Firm Newswire) December 30, 2013 – Most workers who participate in 401(k) plans are trying to save enough for a comfortable retirement and perhaps an inheritance for their children and grandchildren.
A prominent estate planning attorney says that while 401(k)s are a good way to add to one's retirement savings, it is important to take a look at the fees a plan charges, as these fees can erode one's savings.
“Employers are now required to provide workers with more information about the fees connected with administering 401(k)s and the different investment options they provide,” said Michael Gilfix, a Palo Alto estate planning attorney.
In 2012, the Labor Department began requiring employers to provide additional information about fees. The administration expenses of a 401(k) plan can be significant. One estimate found that fees on some plans can erode up to 30 percent of a person's retirement savings. Industry experts expected workers to pressure their employers to switch to plan administrators that charge lower fees, but the number of these requests has not matched predictions. The nonprofit Employee Benefit Research Institute found that only 53 percent of participants in 401(k) plans noticed the new disclosures, and most of those did not do anything about it. That may be a mistake, says Gilfix.
“One easy action you can take is to switch out of the types of investment options that carry higher fees,” said Gilfix. “It's important to pay attention to your 401(k) plan to make sure you are getting the best possible return on your investment, and that includes avoiding fees whenever you can.”
It may be that many people do not take action because they do not have enough information to judge whether fees are too high. One solution is a service such as Brightscope, which rates 401(k) plans and includes a database of information about fees. CNN Money also has a free tool available that allows workers for large companies to compare 401(k) fees. Tools such as 401kfee.com allow one to calculate the impact of fees on one's retirement savings.
“The important thing is to take charge of your own retirement plan and estate plan,” said Gilfix.
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