Participants are largely unaware that their largest retirement asset, their 401k, contain fees that may be slowly eroding their return. Plan costs include: recordkeeping and administration fees, as well as fund manager expenses, advisor compensation, third party administrator payments, and 12b-1 fees payable to the advisor as a commission. Ask your employer questions about your plan’s fees. If your plan includes an advisor compensation be sure to take advantage of these services. Another option is to diversify your holdings outside of your 401k. Roth IRAs are a popular solution for long term investing. Often a 401k has limited choices of funds. In contrast, your Roth IRA can give you freedom of security selection and help you avoid paying those extra expenses in your 401k, in addition to other benefits. If your employer does not provide an employee contribution match, ask whether they plan to at some point. Employer match contributions can go a long way in reducing your plan’s expenses, protecting your principal, and improving your potential long term return.
Anthony Montenegro has been featured in: Forbes, The Huffington Post, CNBC, U.S. News and World Report, The Simple Dollar, Go Banking Rates and Yahoo Finance!