Hidden 401(k) fees you you may be paying

(AP) -- These days, not many people are smiling when they see their 401(k) statements. But they'd be downright outraged if they saw the fees that are automatically deducted from their returns. The Labor Department is proposing a rule that would require employers to disclose to workers the fees and expenses charged by mutual funds and other investments in a chart or similar format.

Following are some answers to common questions about 401(k) fees.

Question: How do I find out what type of fees I'm paying?

Answer: Asset management fees vary depending on the mutual funds you select and most likely aren't listed on your statement.

The best place to see them is on your plan's Web site, perhaps under a heading called "Fund Facts." Fees are also usually outlined in your plan's annual report (take a look, if you haven't thrown it out).

Funds that require more active management -- such as those invested in small companies or emerging markets -- will likely have higher fees, said Sheryl Garrett, president of Garrett Planning in Shawnee Mission, Kansas.

Management fees are based on a percentage of your assets.

Administrative and trustee fees, which are negotiated by your employer, may be itemized on your statement. More likely, they're embedded in the invisible asset management fees described above and will be tough to dig out. Workers usually pay anywhere from $35 to $125 a year in these fees.

Fees for making trades can be 1 percent to 2 percent of assets to discourage workers from making too many. You should be notified of the fee at the time of the transaction, but it won't necessarily show up on your statement.

Question: Who pays the fees on my plan, me or my employer?

Answer: You do, mostly likely. The majority of employers pass fees on the workers, said Barb Hogg, senior retirement consultant with Hewitt Associates, a human resources consulting firm.

Question: Is there any way to lower my fees?

Answer: Not really, unless you pick funds with lower management fees. The legislation would make those fees more transparent to workers. Ultimately, however, it's probably better to focus on the type of funds that are right for you, rather than getting too caught up in the fees, Hogg said.

Question: How will making fees more transparent help me save for retirement?

Answer: Employers will be able to compare options, selecting plans with the lowest fees.

"We're liable for making the best decisions (for our workers), yet we're not empowered with what our options are," Garrett said.

Transparency will also lead to more competitive fees, she said.

Even if your employer pays your plan's administrative fees, you're still losing out. That's money your employer could be investing back into you.

Copyright 2008 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

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