Having access to a 401(k) plan is terrific for retirement savers, but you should be aware that these plans come at a price. There may not be an upfront cost, but 401(k) plans always have fees tucked away somewhere – often at several levels. Understanding how these fees work can help you to make wise retirement planning decisions.

Why do fees matter?

The fees and expenses you'll find in your 401(k) account may sound small, but they can have an enormous impact on your returns. For example, let's say that you get a 401(k) account from a new employer and roll over $50,000 into the account. If you get an average 7% return on that $50,000 over the next 30 years, that money will turn into more than $380,000. However, let's say that your $50,000 is subject to fees adding up to 1.5% per year. In that case, instead of a 7% return, you'd actually be getting a net 5.5% return. And at the end of 30 years, you'd have less than $250,000 instead of $380,000. That's a pretty huge difference! You can see how keeping your fees low can dramatically increase the amount you'll be able to save in your 401(k).

Cash in envelope labeled '401k'

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1. Administrative fees

The company that manages your 401(k) plan -- be it a bank, a brokerage, or some other financial institution -- has expenses related to keeping your account up and running. It has employees to pay, a website to maintain, and numerous other expenses related to running a financial business. 401(k) trustees will typically pass these costs off to the account holders in the form of an administrative fee. Sometimes your employer will pay this fee for you; other times, it will be passed on to you either in the form of a flat fee or of a percentage of your total balance.

If your employer isn't paying the administrative fee for you, there's no avoiding it; it's just part of having a 401(k) account. However, you should find out how much this fee is and incorporate it into your retirement plan so that you don't have an unexpectedly small balance come retirement day.

2. Service fees

Some of the actions you might want to take regarding your 401(k) account will incur a service fee from the trustee. For example, if you decide to roll your 401(k) investments over to an IRA, your 401(k) trustee will likely charge a service fee to do the rollover. Some 401(k) trustees offer financial advisory services that are also likely to incur service fees.

Before you do anything other than the basic buying and selling of investments within your 401(k) account, check first to find out if you'll incur a fee and how much it will be. You may decide that it's not worth doing after all.

3. Investment fees

While service and administrative fees are typically charged by your 401(k) trustee, investment fees are more often charged by the financial institution that manages that investment. For example, if you buy shares of a mutual fund through your 401(k), the mutual fund provider will charge a fee to cover its expenses in managing that fund.

Information on investment fees is often buried deep within the fund's prospectus; however, you can take it as a given that an actively managed fund will likely have much higher fees than a passively managed fund. That's because with an actively managed fund, you're paying the salaries of one or more money managers whose job it is to choose investments and do the buying and selling. A passively managed fund simply mirrors an index of some kind, so there's a lot less buying and selling (meaning much lower commissions) and no high-priced money manager to finance. Stick with index funds and index ETFs and you'll keep your investment fees to a minimum.

Paying unnecessary fees eats into your retirement savings. To make the most of your 401(k), be sure to understand the fees it charges and do what you can to reduce or eliminate them.