What do y'all pay for 401k fees?

I’ve noticed that every January, April, July, and October, my 401k has four fees ranging between $4 and $15… is this normal? Any way to avoid these fees? It’s through a local broker I can’t find much info about, but they actually have great customer service.

Also, I have it invested in a Schwab 2065 target index… is that a decent choice? Does it have a low expense ratio? For my Roth IRA, I use VTI and was thinking of adding AVUV. Should I move my 401k to that or just leave it?

Oh, and if it matters, I’m 20 years old, and my 401k has around $15,000 in it.

With a 401k, you’re pretty much stuck with the fees and plan options your employer picked. Plans with higher fees tend to be cheaper for the company.

Once you leave, you can roll it into a new employer’s plan if they have lower fees, or move it to an IRA if that fits.

Most 401ks have three types of fees:

  1. The expense ratio on the fund (could be lower depending on fund options)
  2. An asset management fee that’s usually a percentage of your total invested
  3. A record-keeping fee, often flat (like $15 per quarter)

You can’t really do much about fees 2 & 3 if they’re in place, but you might save on fee 1 by choosing a low-cost index fund instead of actively managed funds.

@Marlowe
For personal investing, I go with VTI, hoping to eventually switch to VTSAX. My 401k is in a Schwab 2065 target fund, but I’m not sure about its expense ratio or average return. Guess I should check that out.

@Marlowe
My expense ratio on the Schwab fund is 0.08%

Wylie said:
@Marlowe
My expense ratio on the Schwab fund is 0.08%

That’s actually pretty good. The other fees (2 and 3 above) are mostly out of your hands. Your only option to avoid them is to roll over the funds after leaving your job.

@Marlowe
Thanks for the info! At least I know I’ve done what I can. Between my employer match and some extra that goes into my 401k (since I skip the health insurance and stay on my parents’ plan), I think I still come out ahead. I understand my Roth IRA pretty well, but I couldn’t access my 401k info until recently, so I’m just starting to figure it out.

@Wylie
Yep, the tax benefits of a 401k generally outweigh the fees for most people. It’s a solid way to build wealth over time.

Marlowe said:
@Wylie
Yep, the tax benefits of a 401k generally outweigh the fees for most people. It’s a solid way to build wealth over time.

Is there a point where contributing more actually doesn’t reduce my paycheck because of the tax savings? I feel like that makes sense but not sure how it works out in practice.

every January, April, July, and October there’s a few fees from $4 to $15… normal?

Pretty normal across plans.

Options to eliminate these fees?

Nothing you can control. Only your employer can make that change.

Through a local broker

401k brokers charge your employer, who can either pay all, some, or none of the fees and pass the rest to you. Sounds like your employer passes these fees on to you, which is common.

Schwab 2065 target index, is it good?

Yes.

Expense ratio?

If it’s below 0.10%, that’s amazing; if under 0.25%, still solid.

My Roth IRA is in VTI, considering AVUV. Should I swap my 401k to that?

If similar funds are in your plan, it could be worth looking at. But generally, the Target Date Fund (TDF) is a good choice.

20 with $15,000 in 401k

You’re on the right track; keep going!

@Benn
Thanks for the advice! Looks like I’m doing what I can. I contribute 7% and get a 3% match, so that’s 10% total before taxes. Plus, since I decline health insurance, my employer puts that money in too, so the bonus outweighs the fees. And thanks for the encouragement! I went to work straight out of school at 18, spent half of 19 not managing my money well, but got into personal finance, so most of that $15k is from the past year. I’ve got about $2,000 in VTI in my Roth IRA, and once my truck’s paid off, I’m aiming to max out 2024, then maybe up my 401k contributions.

My 401k fees are 1.6%… pretty high! On a $100k balance, that’s $1.6k each year.

Valen said:
My 401k fees are 1.6%… pretty high! On a $100k balance, that’s $1.6k each year.

I think I’m paying about $200 on $15,000… not great at quick math, but I think that puts me a little better off than you?

@Wylie
Yeah, it’s rough. From what I’ve read, smaller companies often have higher fees. I think around 30% of your balance could be lost to fees after several decades with a 1.5% fee.

Valen said:
@Wylie
Yeah, it’s rough. From what I’ve read, smaller companies often have higher fees. I think around 30% of your balance could be lost to fees after several decades with a 1.5% fee.

I think mine’s around 1% including that $15 quarterly fee.

You’re mostly stuck with the fees while employed. 401ks are more expensive to manage, so that’s where the higher costs come in.

Target Date Funds (TDFs) like yours are a popular choice, though I don’t personally prefer them. You probably won’t be able to invest in AVUV directly in a 401k since most only offer mutual funds. Look for something similar, like a value fund or a Russell 2000 fund.

@Kasey
My Roth IRA is 100% VTI. I plan to switch it to the mutual fund version once it hits $3,000, and then I might add AVUV. If I could, I’d probably put my 401k in VTI or a similar mutual fund, but yeah, the fees are a bit annoying. I guess I’ll live with it since they’re only every few months, but they seem to slowly rise over time.

The company’s been good to me, paying more than other companies for people my age and experience. Plus, they let me take paid leave after a major injury, so I’ll stick with them till I’m ready to start my own construction business. That’s probably why I’m loyal, even if that’s not the usual way to be anymore.

Fees? It’s like they’re taking free money!

Riley said:
Fees? It’s like they’re taking free money!

Almost $200 a year for me!

I just pay $13 per quarter for my Fidelity 401k, so $52 a year total.

Zeek said:
I just pay $13 per quarter for my Fidelity 401k, so $52 a year total.

So it’s normal, I guess! Mine’s a $15 fee, a $10, and two $4 ones each quarter.