This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

401(k): Don't Ignore the Fees

The following commentary is from an investment professional with Clear Harbor Asset Management who is a participant in TheStreet's expert contributor program.

NEW YORK ( TheStreet) -- Interested in learning more about the fees that are coming out of your 401(k) retirement savings account?

The good news is that the Department of Labor is imposing new rules soon requiring Wall Street firms to provide more transparency about the fees they charge employers and their workers on 401(k) accounts.

Follow TheStreet on Twitter and become a fan on Facebook.

The bad news, however, is that it's 2012, and our elected officials are just getting around to requiring some basic transparency on the fees that Wall Street charges employers and workers on 401(k) retirement accounts.

Note this is not about limiting what a 401(k) provider can charge, or any such thing. This is simply about disclosing what a 401(k) provider is charging to its paying customers. It's a little strange that the stewards of retirement accounts for more than 50 million Americans need to have rules imposed on them in order to disclose the full extent of the fees they're charging clients, but apparently that's the world we live in.

Investment professionals need to be compensated for the services they render through fees, but they should be clear and transparent with their customers about those fees. For their part, investors should be wary of a manager that isn't forthright about fees, and they owe it to themselves to always make an effort to stay informed on how much they're paying relative to other options. Fees can have a substantial effect on returns over time.

Fingers in the Pie

There's little doubt that the rise of 401(k) accounts has been a bonanza for the financial industry. The Internal Revenue Service first began allowing workers to contribute their own money to the accounts on a tax-deferred basis in the early 1980's. By 1990, 401(k) plans had about $900 billion in assets, and by 2011, that figure had reached $4.3 trillion.

During that period, the proliferation of 401(k) accounts dramatically increased the amount of stock market risk that was being shouldered by the average U.S. household. Meanwhile, a series of speculative bubbles culminated in the global financial crisis and the notorious government bailouts for major financial institutions like AIG (AIG), Bank of America (BAC) and Citigroup (C), leaving major stock indices with their worst long-term performance in modern memory.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs