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Fees Associated with 401(k) Plans

  • Published: 2011-04-28 : AARP.
  • Synopsis: Americans are trying to plan for their retirement without all the information they need about their 401(k) plans.

Main Document

401(K) Participants Unaware Of Fees Associated With Their Plans - New Online Fee Calculator Aims to Raise Awareness of Potentially Hidden Costs of Saving.

AARP today released a survey revealing that 401(k) plan participants are largely unaware of the fees they pay to their plan providers. When asked, more than seven in ten (71 percent) 401(k) plan participants incorrectly reported that they did not pay any fees and six percent said that they did not know whether or not they pay fees. A new, free 401(k) fee calculator on AARP's web site aims to help investors better understand 401(k) fees and their potential impact.

"Americans are trying to plan for their retirement without all the information they need about their 401(k) plans," said Jean Setzfand, AARP Director of Financial Security. "The research shows a clear lack of understanding about 401(k) fees and the impact they might have on one's saving. We developed this calculator to help people make better informed decisions about their retirement savings plans."

The AARP 401(k) Fee Calculator, powered by BrightScope Inc., is a revolutionary tool that estimates the fees associated with individual plans and compares them to the average for a low-cost 401(k) investor. It also approximates in dollars the potential impact of the fees on the investor's balance at retirement age.

"Fees are often hard to read and understand even when you know you are paying them," said Setzfand. "And even small fees can have a significant negative impact over a lifetime of saving. This unique tool provides key information and promotes awareness of the potentially hidden costs to investors who are increasingly responsible for their own retirement today."

Setzfand added that a sound investment strategy should take into account not just fees, but also an individual's portfolio, risk tolerance, objectives, diversification, fund performance, age and other factors.

After completing the calculations, the AARP 401(k) Fee Calculator suggests additional resources and action steps investors might consider if they find their fees are higher than the average low-cost 401(k) investor. The calculator can be found at:

The complete results of the survey can be found at:

About AARP - AARP is a nonprofit, nonpartisan organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for 50+ Americans and the world's largest-circulation magazine with nearly 35 million readers; AARP Bulletin, the go-to news source for AARP's millions of members and Americans 50+; AARP VIVA, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

About BrightScope, Inc. - BrightScope, Inc. is an independent provider of 401k ratings and financial intelligence to plan sponsors, advisers, and participants in all 50 states. Our mission is to increase the retirement security of America's workforce by bringing transparency and efficiency to the 401k plan market. We maintain a comprehensive database of information on the 401k plan market and add additional value and insight by quantitatively rating each 401k plan across critical metrics. BrightScope empowers plan sponsors to quickly and accurately determine the optimal structure for their 401k plan and choose the providers that provide the most value for the fees they charge. BrightScope is the only 401k analytics firm that is truly independent and does not accept compensation in the form of revenue sharing from mutual fund companies or plan providers. BrightScope is aligned with plan sponsors and seeks to avoid conflicts that will jeopardize its ability to give its clients unbiased advice. BrightScope is not a fiduciary under ERISA.

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