Even if you’ve managed to avoid sitting through a company benefits meeting, you’re no doubt familiar with the concept of a 401(k) plan. A 401(k) is a defined-contributions plan. You sock away a set amount each paycheck, your employer may match some percentage of the contribution, and years later you declare your own financial independence.

But even if you know how a 401(k) works and enthusiastically contribute to one, do you know about hidden fees that can come with it?

Finding the Fees in 401(k)s

Many workers don't. A TD Ameritrade survey found that just 27% of investors knew how much they paid in 401(k) fees, and 37% didn't realize they paid fees at all. Unfortunately, many never think to ask how much a 401(k) provider makes off the money you hand over to invest. Your provider takes a fee every month, and over time these fees can impact your returns. Some 95% of 401(k) plan participants pay fees.﻿﻿

These fees aren't truly "hidden." The U.S. Department of Labor requires 401(k) providers to disclose all fees in a prospectus that is given to you when you enroll in a plan, and which must be updated every year.﻿﻿

We know you devour these statements the minute they arrive. As the fees are no longer difficult to locate, it pays to pay attention to them. When you receive a 401(k) statement or prospectus, check for line items or categories such as Total Asset-Based Fees, Total Operating Expenses As a %, and Expense Ratios.

Key Takeaways 401(k) plans come with various fees that aren't always evident to the investor but can greatly impact an account's return over the long-term.

Ranging from 0.5% to 2%, 401(k) plan fees can vary greatly, depending on the size of your employer’s 401(k) plan, the number of participants, and the plan provider. ﻿ ﻿

﻿ Reflecting mostly administrative and investment management costs, 401(k) fees spring from two sources: the plan provider and the individual funds within the plan.

Although individual investors can't do much about plan provider fees, they can choose funds within the plan with lower expense ratios.

Two Key 401(k) Plan Fees

Finding the fees is one thing. Understanding them is another. The most firmly entrenched of the fees is the 12b-1 fee, named after the relevant section of the Investment Company Act of 1940.﻿﻿ Generally filed under marketing and distribution expenses, 12b-1 fees are ostensibly earmarked for the intermediaries who sell 401(k) plans to your employer. These fees are capped at 0.75% of assets, while some funds impose a 0.25% shareholder services fee.﻿﻿

Note that 12b-1 fees charged by individual funds are separate from investment management fees, which are the cut the 401(k) provider takes for itself.﻿﻿

For example, Fidelity bills itself as the No. 1 recordkeeper of 401(k) plans in the United States.﻿﻿ Businesses that use Fidelity report paying as little as 0.53% in fees, though some say expenses are well over 1%.﻿﻿

401(k) fees fall into two basic categories: those charged by the plan provider, and those charged by the mutual funds or ETFs in the account.

Breaking Down 401(k) Plan Fees

Notably, 401(k) plan fees typically fall into four categories:

Investment

Administrative

Individual service

Custodial

To illustrate the point, here’s a sample account quarterly summary, not from a 401(k) provider but rather from a third-party firm that administers plans and keeps records. (Yes, you can bet they get a cut too, but your employer probably picks that up.) The figures, which represent dollar amounts, are on a total contribution of $3,207.70 for the quarter.