The Costs of a 401(k) Plan

Costs of a 401(k) Plan

Because 401(k) plans are corporate, participants have little say in how their funds are allocated. The company will have set up the plan. It will usually hire a financial management firm to oversee the fund, and it will pay the firm a percentage of the fund’s value. Employees will have no influence on how the fund is managed or how much it costs.

Costs of a 401(k) Plan

For many people, that’s a benefit. Not everyone knows how to choose bonds and stocks, or how to balance their portfolios. Taking part in a 401(k) means that they can get on with their lives without wondering whether they shouldn’t have invested elsewhere. For those who would prefer to have more control, though, a 401k means trusting that the finance company their employer has chosen is capable of doing a good job and at reasonable rates.

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