NEW YORK (MainStreet) - David Walters, a certified financial planner and certified public accountant with Palisades Hudson Financial Group, is an evangelist when it comes to retirement plan fees.
He likes to tell clients, and any others wondering why their retirement funds are held back by charges and fees, they're not "powerless" when 401(k) plans "stick employees with excessive fess."
"By making smart investment choices, you can cut your costs," says Walters.
To do that, you first need to understand the fees your plan charges, he says.
First up, knowing what kinds of fees can negatively impact your retirement plan performance is a big key, he adds. Here's what you should focus on, fee-wise, Walters explains:
- Plan-level expenses are charged by the plan administrator or custodian. These cover administrative services, such as recordkeeping, accounting, legal and trustee services.
- Fees on the underlying investments are charged by the mutual funds in your plan. Each fund charges an "expense ratio," a portfolio management fee that is charged per dollar of assets in the fund.
"Plan participants may also pay transaction costs for buying and selling funds," Walters says. "These may include trading fees and commissions that managers pay to buy and sell securities. Additionally, some funds also have 'sales charges' or 'loads.' These may be paid when you invest in a fund -- front-end load -- or when you sell shares --back-end load."