You may not realize it, but hidden fees could be costing you up to 30 percent of your 401k plan over time.


A new federal rule, that went into effect July 1, requires 401k plan providers to disclose certain fees which employers have to pass on to participants by August 30. The idea is to boost transparency and help participants and employers compare plans and shop around for the best option.

"It means you have a better shot of seeing what you should have been looking at all along," said Ken Kamen, President of Mercadien Asset Management and Author of Reclaim Your Nest Egg, Take Control of Your Financial Future. "And while transparency does help the employee have a better say, it's ultimately up to the employer to decide what kind of program they want to have and whether they want to pay the fees or pass the fees on to their employees. So, it certainly empowers employees, but it may not necessarily change anything."

"Transparency is a great thing, but 401k investing for many people is the only way that they're going to have any kind of retirement income because, in this day and age, people are spending everything they get in their paycheck. So, having money taken out before they see it on a tax deferred basis, is their best way of saving and, in some cases, it's their only way of saving. If it's out of your hands, you can't spend it," said Kamen. "But rather than focus on the transparency of the fees, maybe they should take it to the next step and use this as the transparency of their lack of saving for their own financial future and recognize they can't ignore it anymore and use it as their new date to start saving for their financial futures."

"In the 401k market, you're never going to get away from fees," said Kamen. "The reality of it is, you shouldn't mind paying fees if you're getting something for them. It's a positive thing that investors are going to be empowered to look at things that they should've been looking at all along. You'd probably find that more investors and more employees would be better off if they just saved an extra two or three or five percent in their 401k to more than make up for the fees. I'm not justifying high fees, but the reality is there are very few people who max out their 401k. Many people invest in their 401k based on what's going on in the news today. What's going on today is that things are choppy and stocks are on sale. So, you have to remember this is money you're putting away for ten, twenty, thirty and forty years in some cases. The news of today is irrelevant to that. In fact, the worse the news is today, the better it is for a 401k investor because that means they can buy things on sale because their future self needs the money. So, investing in the 401k and maxing out to the extent that you can is much more beneficial to you and you should pay attention to that much more than the fees."

"The reality is, you should look at what you can control and do everything you can to invest for your future self and don't let the news of the day get you off the track when it comes to investing," said Kamen.