Before I get into the meat of this article, I want you to know that I am a big believer in the wealth creating power of 401(k) plans. However, it is important to know that some 401(k) plans are better wealth creators than others. Much of it comes down to the fees imbedded in your plan.

Do you really know what you pay for your retirement plan? If you do, consider yourself in the minority. I casually asked my wife if she knows how much she pays for her plan. She replied that her employer pays the fees. While she works for a large organization and her plan has low fees, her answer was very typical (but wrong).

A recent survey* found that more than half of Americans (57%) believe they pay “no fees” or “very low fees” for their 401(k) plan at work. Another quarter of respondents said they “don’t know” what they pay. So, about 75% of retirement plan participants don’t know how much they pay for their 401(k) plan.

While fees have been on the decline, the 401k Averages Book 21st Edition shows the average total plan cost for a small retirement plan (100 participants/$5,000,000 assets) was 1.20% over the past year, while the average total plan cost for a large retirement plan (1,000 participants/$50,000,000 assets) was 0.90%. But there is wide range between high and low-cost providers. For instance, the range of a plan with $1,000,000 in assets and 100 participants ($10,000 average account balance) is 0.68% to 2.73%.

Many hard-working Americans use their 401(k) as the foundation for their retirement savings. And they do not know how much fees may be eroding their returns. If you work for a large national corporation (think of multi-billion dollar ones with thousands of employees), then you can be pretty confident your fees are reasonable. Why? Because if they were not in line, they would have been sued by now. But for most other firms (especially small ones), it’s important to check out your plan expenses.

How significant are plan expenses? Well, if your 401K fees are just a percentage point higher, it could literally mean hundreds of thousands of dollars of difference in the total value of your account when you reach retirement. The percentage you are charged is based on your total balance, not the investment return. That makes fee reduction an important goal for any retirement saver or small business owner looking to keep more of their money working for them, rather than for the plan providers, fund managers or investment managers.

There are two types of fees you will need to uncover: administrative and investment fees. Administrative fees are the hardest to locate and the least understood. Investment fees are based on the individual funds or investments you have within the plan. You can find both of these fees in required disclosure information on your 401(k) plan website. In addition, the investment fees are also listed in prospectuses that are made available to you. If you are having trouble finding these disclosures, ask your plan administrator.

What can you do about the fees as a plan participant? First, if your investment fees seem high, check out other investment options in the plan that are lower cost. Consider switching to them.

But what about the plan administrative fees? You have no options to avoid these. But you can decide how much of your retirement savings you want to commit to your 401(k) plan. If it’s a low-cost plan, you may want to invest up to the annual maximum allowed. However, if you see total plan costs approaching 1.5% or more, then it is a high-cost plan, and you may want to invest up to the match and look elsewhere for the rest of your savings (IRAs or a brokerage account).

Keep your money working hard.

Enjoy the Journey!

*The results are from a national survey Rebalance commissioned about retirement costs in early February. It included 1,016 U.S. adults between 45 and 75 years of age.)