Is Your 401(k) Good For You?

1. Different options mean different fees-

Realize there are fees, even if you invest in index funds, there are internal fees that take part of your return. The average is about $83 per $1000 invested, but professionally managed funds are more expensive. Read the small print at least once. Information is available on the web or print to disclose fees.

2. Advice Varies-

Many companies offer a financial planner. About 60 percent offer some level of advice, but many people don’t take advantage of this benefit. Also, some complain that advice is too generic. You can hire your own planner. Some planners charge an hourly fee or some will charge about 1 percent of account to assist you with choices. Also, do your own research. For example, Morningstar is a good resource for evaluating mutual funds. Some websites, like Boglehead.org can provide advice about anonymously posted questions (no guarantee about the expertise of the answers.)

3. Choices Can be Limited-

The average plan has just 13 choices. Most offer large cap stock funds and international funds, but only 20 percent offer Real Estate Investment Trusts and only 15 percent offer emerging markets stock funds. Consider a “brokerage” option — about 20 percent of plans offer this “self-directed” approach. You can personalize the plan, but that maybe risky.