I was checking the balance of my 401(k) account, and it looks like a few days ago they have deducted close to 20% of my balance as ‘management fee’. This has got to be a f*cking mistake, right?! I’m going to have a serious conversation with someone next week. In the prospectus, the ‘expense ratio’ of all the funds are listed as around 1% or less, and I’m assuming that’s the ballpark for what I’ll be paying in fees. What is typical for a 401(k) account? This is a new plan to me, so I’m not completely clear on how things work. Under my old plan, my former employer paid all the fees, so I’ve never paid any attention to that before.
What does the paperwork say? What are the holdings in the 401(k)? The actual instruments the 401(k) is holding (mutual funds most likely) may have a 1% expense ratio, but the administrator of the 401(k) may have a periodic management fee.
My Roth IRA had a straight $35 per year management fee (not a percentage of the balance), which was waived once I had $10K in it. It sounds as if this is a new plan for you - is your balance low because you just started? If you had a balance of only a few hundred, then a fee of $35 may well be 20% of your balance, but next year the same $35 won’t be so much percentage wise.
On the other hand if the management fee is 20% of your balance, then you are getting screwed - but I doubt that is the case. Let us know the terms stated in the paperwork and someone could tell you.
Thanks. I’ve looked through all the paperwork I have, and other than the fees for each of the mutual funds, I couldn’t find any references to fees charged by the plan administrator. There’s a lot of materials and I could have missed it though…
I guess I should mention that ‘new’ is kind of relative: It’s been about half a year, and I’ve already contributed a fair amount into the account. Let’s just say that they have deducted a substantial amount of money. I have no idea how did they come up with that number, but it can’t possibly be right, because the account is just going to keep hemorrhaging at that rate. I’m going to talk to someone to find out what the hell is going on.