The fees that crop up in your 401(k), IRA or other retirement accounts can have a huge impact on the overall return you receive from these funds. In fact, the federal government feels so strongly that retirement plan participants should be more aware of their fees that they are changing some of the rules for communicating them beginning in 2012. Smart Money recently outlined the top fees that impact retirement plans below. How many of these fees do you recognize in your own plan?
IRA Plan Fees
- Account transfer
- Roth conversion
- Federal fund wire and overnight delivery
- Special investment and set up
- Form 990-T filing
For 401(k)plan sponsors, fees could include:
- Money management (often charged in mutual funds, etc.)
- Investment advisory (paid to the local broker/advisor)
- Compliance (often included with third party administration)
For 401(k) plan participants, fees could include:
- Loan processing fees
- Distribution fees
- Self-directed brokerage fees
Although in most cases, you cannot make the fees go away, there are more tax-efficient ways to help these charges have less impact on your investments. Among them:
- Ask to be direct-billed for the fees.
- When possible, ask to pay any allowable fees with money outside the retirement account, allowing more money in the account to grow tax-deferred.
- If you’re taking distributions, have the fees deducted from your qualified account.
- Ask if your plan sponsor will absorb the fees.
Here is the complete SmartMoney article.
If you have questions about your retirement plan fees, talk to your plan administrator. If you are a plan fiduciary, consider conducting a plan assessment with a qualified accounting professional, who may be able to show you fees, fund selections and returns on other benefit plans of comparable size.
This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, 10/17/2011.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.