Question

2) Describe and detail all of the fees/costs associated with a 401(k). Write at least 3 paragraphs.

Answer 1

According to Robert Hilton’s (4) findings, 65% accountholders of 401 (k) were not aware that they paid a fee, and also 83%, had no primary know-how regarding the numerous fees and costs that everybody in 401(k) incurs. 401(k) program costs and expenses in general are classified into four groups:

The first lot includes administrative costs (Hilton 4). According to Hilton, these are fund costs for recordkeeping, providing reports, transaction processing, guaranteeing the program adheres to applicable laws, resolving savers’ issues, and offering support services. Administrative costs usually vary from 20% to 40% per year. The second group includes management costs (Hilton 4).These are wages for fund supervisors, investment scientists, and workers in charge of fund’s projects. Asset administration costs typically vary from 50% to 100 yearly. The third group incorporates marketing costs. Such expenses comprise costs of educating investors and prospective investors concerning the investment including brochures, ads, and extra educational material (Hilton 4). Finally, we have trading costs which are expenses that the fund pays when purchasing and vending the bonds that consist of mutual funds’ underlying resources (Hilton 4).