Hidden and Excessive 401k Fees are Causing Severe Damage and Loss for 401k Participants
Today the typical American household saving for retirement in a 401(k) will pay nearly $155,000 in un-necessary, excessive, mostly hidden 401k fees and commissions to brokers, agents and administrators.
Participants in our 401k Easy 401k plans are NEVER charged unnecessary marketing fees, including revenue-sharing fees, agent and broker commissions, or recordkeeping fees. Our 401k Easy plans being a clear exception, the vast majority of small 401k plans are larded with various "marketing fees" that 401k participants unknowingly pay. These unnecessary marketing fees include revenue-sharing fees, agent and broker commissions, and rebates to third-party administrators for pre-packaging mutual funds into the 401k plans. Demos.org, a well-regarded national non-profit research organization, calculates these unnecessary, non-essential marketing fees cost the typical 401k investor approximately $155,000 in lost value for the lifetime of his or her account!
AARP Research Study of 401k Fees
Most 401k savers are unaware they are paying unnecessary marketing fees and advisors commissions, extracted from their 401k accounts. It's a national scandal --- and reduces the typical 401k value by nearly $155,000!
The vast majority of 401k participants in smaller plans are charged unnecessary Marketing Fees they do not know about or understand. According to a study of 401k fees by AARP (AARP.org), "When plan participants were asked whether they pay any fees for their 401(k) plan, eight in ten (83%) reported that they did not pay any fees." For example, a 30-year old who saves $250 a month in the 401k may be charged approximately $136,000 in unnecessary, non-essential Marketing Fees by age 65. For more examples of the losses caused by 401k Marketing Fees to various sample investors, please click here.
What's Published is Not Necessarily What you Pay for Your 401k:
Published record-keeping fees for a company with 15 employees and $1 million in assets
- 401k Easy (www.401keasy.com): $995
- The Online 401k (www.theonline401k.com): $1,100
- Wellington 401k (www.wellington401k.com): $1,350
- Employee Fiduciary 401k (www.employeefiduciary.com): $1,500
- Sharebuilder 401k (www.sharebuilder401k.com): $1,080
Published record-keeping fees plus "all-in" hidden and marketing fees for a company with 15 employees and $1 million in assets
- 401K Easy
- : $995 + [No "all-in" hidden and marketing fees--EVER!]
- = $995 per year complete!
- The Online 401k
- : $1,100 + ["All-in" hidden and marketing fees of 0.72% to 1.89% of $1 million]
- = $8,300 to $20,000 per year
- Wellington 401k
- : $1,350 + ["All-in" hidden and marketing fees of 0.72% to 1.89% of $1 million]
- = $8,550 to $20,250 per year
- Employee Fiduciary
- : $1,500 + ["All-in" hidden and marketing fees of 0.08%]
- = $2,300 per year
- Sharebuilder 401k
- : $1,080 + ["All-in" hidden and marketing fees of 0.65% of $1 million]
- = $7,580 per year
So it's not rocket science to understand why many plan providers in the 401k industry are blowing smoke to make any discussion about hidden or "all in" 401k fees confusing and bewildering. There is a great deal of money at stake, and all this smoke clouds the fact that many small employers are unknowingly offering their employees 401k plans laden with hidden fees.
Hidden and "all-in" 401k fees are getting noticed by the news media and the legal profession via class-action law suits, and some 401k plan providers that made fortunes mining hidden fees are now scrambling to cover their tracks. They are generating the kind of PR confusion many of us remember from years past, when major tobacco companies tried to explain to Americans that smoking was not hazardous their health. Many in the 401k industry are launching the same kind of PR assault, confusing and clouding the issue, but what is really at stake is the end of their 401k hidden fee gravy train, pure and simple.