401(k) Fees Calculator

What your plan's fee takes over a working life, in dollars and as a share of the final balance — and how it compares against a cheaper alternative.

A 1% fee takes about a fifth of what you'd otherwise retire with

A 1% all-in annual fee removes something close to a fifth of the final 401(k) balance over a thirty-year working life. That's the number to leave with. Not 1%. Not 30%. About a fifth, and the calculator above gives the exact share for your own figures.

It's so much bigger than it sounds because "1% a year" is quoted in the least useful unit available. The fee comes out every year, on a balance it has already been shrinking since year one, so the shortfall compounds alongside the account. By the end the gap is a share of the final balance, not of anything you paid in, and no fee disclosure I've read puts it that way.

The calculator shows two numbers on purpose. The fees actually charged, and the amount you end up without. The second is always larger. The difference between them, at 1% or at any other rate, is the growth the fees would have earned had they stayed invested. No provider has ever shown a saver that second number, and I can't see what would make one start.

Work out the cost yourself in five lines

Subtract the fee from the return, compound the balance twice, and the gap between the two answers is what the fee takes. No calculator needed.

1. Start from the balance you hold now. The box above opens at $60,000.
2. Take the return before fees, 7%, and knock off the all-in fee, 1%. That leaves 6%, and 6% is the return you actually get.
3. Grow the balance at the gross rate for your 30 years: $60,000 × 1.07³⁰ = $456,735.
4. Grow the same balance at 6%: $60,000 × 1.06³⁰ = $344,609.
5. Subtract. $112,126 is what the fee took, and against the $456,735 you'd otherwise have it's 24.5% of the account.

Set the contribution box above to zero and the calculator returns those same two balances, because with no money flowing in that is all the model does. One percent a year turned into a quarter of the account, and the only thing that did it was thirty repetitions.

Two errors spoil this when people try it in their heads.

The first is multiplying instead of compounding: 1% a year for 30 years reads like 30%, and 30% is not the answer at either end. The real figure sits below it here and would climb past it over a longer working life, which is why the shortcut is useless in both directions.

The second error is timing. Restore the $12,000 a year the calculator contributes by default and the share drops from 24.5% to 17.2%, not because the fee got cheaper but because a dollar paid in at year 28 is only charged twice before you retire. That's also why the fee on a balance you've left behind at an old employer is the expensive kind: nothing new arrives to dilute it.

The figure to type in isn't the one on the website

The expense ratio on the website is the fund's charge. Only the fund's. Your plan almost certainly costs more than that, and the 1% default above is an all-in figure, built from three layers:

• Fund expenses, which are visible, quoted, and only part of it.
• Plan administration: recordkeeping and compliance, charged as a percentage of assets in some plans and as a flat amount per person in others.
• Advisory or managed-account charges, where the plan uses an adviser or you've opted into a managed service. Often the largest single component.

The first layer hides a second one inside it. A fund's expense ratio can include revenue sharing, which is a slice the fund company pays back to the plan's recordkeeper for administering the money. Where that happens the 401(k)'s administration looks free, because no line ever appears for it, and you're paying for it inside a number you were told was the investment cost. Two plans quoting the same fund at different expense ratios are usually a revenue-sharing story.

Which brings up share classes, the part of this most people have never heard of. One fund often exists in several versions, identical portfolios carrying different price tags, and which version your 401(k) holds was settled in a negotiation between your employer and the provider that you weren't in. Big plans get the cheap class. The Department of Labor says as much in A Look at 401(k) Plan Fees: plans with more total assets may be able to lower fees by using special funds or classes of stock sold to larger group investors, while the retail funds marketed to individuals typically charge higher fees. How much higher is a number I can't give you. The booklet doesn't size the gap, I've found no government figure that does, and the only honest place to look is your own disclosure.

That one is checkable in an evening. Find the fund in your fee disclosure, then look up whether a cheaper class of the same fund exists.

The administration layer repays a close reading. Its shape decides who it lands on. Both shapes are real, and the same DOL booklet names them: administrative fees are either allocated in proportion to each account balance or passed through as a flat fee against each participant's account. A flat fee barely registers on a large balance and is brutal on a small one, which is the whole problem for anyone a year into their first 401(k). What percentage that works out to for you needs your plan's fee and your own balance, and I'm not going to invent either. Charged against assets it runs the other way: painless early, then the dominant cost once the balance is real. Neither design is dishonest. They fall on different people, that's all.

All three appear in the annual fee disclosure your plan has to send you under ERISA. It's usually a dense document, and the numbers you want sit in a table towards the back, past the pages that nobody reads. Twenty minutes with it, once, is the best-paid twenty minutes in personal finance. (Read the administration line twice. It's the one people miss.)

What the disclosure can't tell you is what your 401(k) would cost if your employer went back to the provider and renegotiated, and that's the figure that would actually say whether you're being looked after. I don't know any way for a participant to find it out.

How the money leaves without you seeing it

Investment expenses come out inside the fund before the return is published. The figure on your statement is already net of them, so no transaction ever appears anywhere, and neither the IRS nor your plan requires one to. Administrative charges are sometimes an explicit line and sometimes netted the same way.

Nothing lands on your payslip. No bill ever arrives.

A fee that would be intolerable as an annual invoice for 1% of everything you own passes without comment as a percentage nobody sees.

Below 0.5% is normal in a large plan, and 2% is a complaint

Large plans with index options routinely run at or below 0.5% all-in, and some well under. Small plans cost more, because the same administration is spread over fewer people. That's structural. It isn't a failure of anyone.

Above roughly 1.5% all-in, ask. Above 2%, ask formally, in writing. Employers have a fiduciary duty under ERISA to monitor what the plan costs participants, and questions from participants do prompt reviews. Plan committees have moved whole menus to cheaper share classes on the strength of one persistent email. I can't promise that's how it'll go with yours, but it's how it has gone at others.

Fees inside one plan vary too. A menu that holds an index fund at 0.05% next to an actively managed option at 0.85% is common. Picking the first over the second is entirely within your control, costs nothing, and needs no permission from anyone, which makes it the easiest fee decision on this page.

One thing a high fee never justifies

Skipping the employer match.

A 50% match is an immediate 50% return on the money. No annual fee comes close to offsetting it, not 2%, not 3%, and the arithmetic isn't close enough to need a calculator. Whatever the plan charges, contribute up to the match first.

The order after that doesn't change either. Take the full match in the plan. Then ask whether money above the match does better in an IRA, where you pick the funds and therefore the cost. Then come back to the plan once the IRA is full. Our match calculator shows what yours is worth, and the IRA comparison covers that second step.

One more thing. When you leave a job, the balance you leave behind keeps paying that plan's fees while receiving no new contributions, for as long as you leave it there. Moving it somewhere cheaper, usually an IRA, is the largest fee decision most people ever make, and most people make it by not making it.

Frequently asked questions

How much do 401(k) fees cost over a lifetime?

Far more than the annual percentage suggests. A 1% annual fee on a growing balance over thirty years typically removes somewhere near a fifth of the final account. Not 1%, and not 30%. The reason is compounding: the fee is charged every year on a balance the fee has already been shrinking, so the shortfall grows on itself.

What is a reasonable 401(k) fee?

In a large plan with index options, an all-in cost near or below 0.5% a year is achievable and many do better. Small plans cost more per head. The same administration is spread over fewer people, so above about 1.5% all-in is worth questioning, and above 2% is worth taking to whoever runs the plan. Judge the all-in figure (fund expenses plus administration plus any advisory charge), not the fund expense ratio alone.

Where do I find my 401(k) fees?

In the annual fee disclosure ERISA requires your plan to send you, usually a dense document with the numbers in a table towards the back. It separates investment expenses from plan administration. Your provider's website will show fund expense ratios; the administration charge is often only in that disclosure, which is why people underestimate the total.

Should I skip my 401(k) if the fees are high?

Not up to the employer match. A match is an immediate return no fee can offset; a 50% match dwarfs even a 2% annual charge. The sensible order is to take the full match whatever the plan charges, then consider whether money above that is better placed in an IRA where you choose the funds, then return to the plan once the IRA is full.

Do 401(k) fees come out of my balance or my paycheck?

Almost always the balance. That's why they're so easy to miss. Investment expenses are deducted inside the fund before the return you see is published, so they never appear as a transaction, in a 401(k) or an IRA alike. Administrative charges may show as an explicit deduction or be netted the same way, and no bill ever arrives. Nothing lands on your payslip.

Can I do anything about high 401(k) fees?

Three things. Choose the cheapest suitable funds in the menu, since expense ratios within one plan often vary several-fold. Raise it with HR or the plan committee, because employers have a fiduciary duty under ERISA to monitor plan costs and evidence from participants does prompt reviews. And when you leave, roll the balance somewhere cheaper instead of leaving it in a plan you're no longer contributing to.