Things to Know about Retirement Plan Fees

Two things to know about retirement plan fees:

• What they are
• How to make investment decisions with fees in mind

What retirement plan fees are

There are different varieties of fees, but the most typical and prominent is the investment fee, usually expressed in terms of a percentage. Two investments being equal (which is impossible), the one with lower fees, over time, is going to perform better, so retirement plan fees are one element to consider when selecting your investments.

The returns shown on your quarterly statement will be net of the investment expenses. You should also be receiving a fee disclosure document once a year that lists all your expenses.

How to make investment decisions with fees in mind

You shouldn’t make investment decisions solely based on fees, but you have to consider the types of investment and the fees themselves, which vary by investment type. More complicated investment options will typically be more expensive, since they cost more to run.

Active versus passive management of options can also affect pricing. Whatever your decision, a more expensive investment would have to outperform the lower-cost investment in order to make up for the investment fees.

Now that you know a little bit more about retirement plan fees and how they affect investment decisions, be sure to review your quarterly statements and fee disclosures to evaluate your current investments so you can make sure you’re on track to reach your retirement goal.

Learn More with:

One Day is Today

Pete the Planner's Retirement Plan Fee podcast

Simplify Your Retirement Accounts article

Pete the Planner Indexed Investing video