When asked whether they pay any fees for their 401(k) plan, nearly two in three (65%) 401(k) plan participants surveyed reported that they pay no fees and only about one in six
(17%) stated that they do pay fees. Another 18 percent admitted that they do not know whether or not they pay any fees.
Nevertheless, after being told that 401(k) plan providers often charge fees for administering their plans and that these fees may be paid by either the employer that sponsors
the plan or the employees that participate in the plan, the vast majority (83%) of respondents acknowledged that they do not know how much they pay in fees.
Only about one in six (17%) 401(k) participants reported that they know how much they pay in fees and expenses for their plan. When these respondents who reported
knowing how much they pay in fees were asked to estimate the percentage of their account balance that is used to pay fees, approximately one in three (33%) indicated
that they pay no fees, almost one in four (23%) reported that they pay fees equivalent to 1 percent or less of their account balance, and just over one in five (22%) estimated
that their fees are 2 percent or more of their account balance. Another nine percent did not provide an estimate.
Do you know how much in fees and expenses you are paying for your 401(k) plan?
When asked whether their 401(k) plan charges specific types of fees, including an administrative fee and a redemption fee, more than half of respondents indicated that they do not know whether their plan charges such fees. Specifically, when asked whether their 401(k) plan charges an administrative fee, only about one in four (24%) said "yes," 21 percent said "no," and 55 percent replied that they did not know. When asked about redemption fees, fewer than one in ten (7%) survey respondents said they are charged a redemption fee, more than one in four (27%) replied that they are not charged such a fee, and nearly two in three (65%) did not know.
When asked to select the correct definitions of these two common types of fees as well as the correct definition of "expense ratio," just over half (51%) of respondents identified the correct definition of an administrative fee. However, fewer than four in ten (38%) respondents were able to identify the correct definition of "redemption fee," and fewer than two in ten (14%) were able to correctly define "expense ratio."