Your company 401(k) plan has to tell you what it costs. Federal rules require your plan to give you, at least once a year, a chart with every fund’s expense ratio and the plan’s administrative fees. Read that chart, take the full employer match, and if the funds cost too much, put your extra savings in a low-cost IRA instead.
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Derek Sall wrote the first version of this post in 2015. Eric Rosenberg updated it on October 31, 2026, with the 2026 contribution limits and current fee rules.
Have you ever opened your 401(k) and thought, “These funds look expensive, and the returns look weak”? Most of us shrug and pick whatever looks least bad. But high fees compound against you for 30 or 40 years, the same way your returns compound for you. So spend 15 minutes checking your plan.
How much can you put in a company 401(k) plan in 2026?
For 2026, you can defer up to $24,500 of your pay into a company 401(k) plan, according to the IRS. If you’re 50 or older, you can add an $8,000 catch-up contribution, for $32,500 in total. And if you’re 60, 61, 62, or 63, the higher catch-up limit lets you add $11,250 instead.
| Your age in 2026 | Employee deferral limit | Catch-up | Total you can defer |
|---|---|---|---|
| Under 50 | $24,500 | $0 | $24,500 |
| 50 to 59, or 64 and older | $24,500 | $8,000 | $32,500 |
| 60 to 63 | $24,500 | $11,250 | $35,750 |
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Where to find your 401(k) fees
You’ll find your fees in the annual participant fee disclosure. Under the Department of Labor’s fee disclosure rule, your plan has to send the disclosure before you first pick investments. After that, you should get a new copy at least once a year. In it, you’ll see each fund’s expense ratio as a percentage, its cost in dollars per $1,000 invested, and the plan’s administrative fees for recordkeeping, legal, and accounting work.
Can’t find the disclosure? Log in to your plan’s website and look for “Plan Documents,” “Fee Disclosure,” or “Investment Options.” Each fund also has a fact sheet. On the fact sheet, look for “Gross Expense Ratio” or “Total Annual Operating Expenses.”
Which 401(k) fees should you check?
Your fee disclosure groups 401(k) costs into three buckets, and you should read all three:
- Investment fees. Each fund’s expense ratio, which the fund takes out of your returns every year. For most people, this bucket costs the most.
- Plan administrative fees. Recordkeeping, legal, and accounting costs. Some plans split these costs across every account, and some employers cover the whole bill.
- Individual fees. Charges for services only you use, such as taking a 401(k) loan. The rule requires your plan to explain these too.
How high is too high for 401(k) fees?
If most of your plan’s funds charge 1% a year or more, your plan costs too much. A 1% fund takes $100 a year from every $10,000 you hold. Meanwhile, broad index funds often charge a small fraction of 1%. For comparison, Empower says the average ETF expense ratio in its managed Personal Strategy portfolios runs 0.06%.
Small and midsize employers end up with pricey plans most often. Usually the owner isn’t trying to hurt anyone. He or she bought a package from a salesperson and never compared the fund costs. Still, the fees come out of your retirement, not the company’s.
What to do if your company 401(k) plan charges high fees
You have three moves, and you can make all three at once.
- Pick the cheapest fund in the plan. Most plans include at least one index fund. Compare the expense ratios on the fee disclosure and choose the lowest-cost fund that fits your goals.
- Take the full match, then save elsewhere. An employer match is free money, so contribute enough to get every matching dollar. After that, put extra savings into a low-cost IRA, where you pick the funds yourself. Our guide on saving for retirement without a 401(k) covers your IRA options.
- Tell the owner or HR. Share the fee disclosure and a low-cost alternative politely. Many owners will thank you. Don’t expect a fast switch, though, since the company may have to wait for its contract with the plan provider to end.
When you leave the job, you can also move the money to an IRA with cheaper funds. Read our guide to rolling over your old 401(k) before you make the move.
What a 1% fee costs over 30 years
A 1% fee sounds small, but over a career it can cost you six figures. Take a hypothetical $100,000 balance that earns 7% a year before fees, with no new contributions. We ran the numbers for two fee levels:
| Annual fee | Return after fees | Balance after 30 years |
|---|---|---|
| 0.10% | 6.9% | About $740,000 |
| 1.00% | 6.0% | About $574,000 |
In this example, the higher fee costs you about $166,000. These numbers are illustrations, not a forecast, since real returns swing from year to year. Still, the gap shows why the expense ratio is the first number to check in any company 401(k) plan.
When does the company match become yours?
The money you contribute is always yours, and the match may not be. The IRS explains that your own deferrals are always 100% vested, while employer contributions follow the plan’s vesting schedule. Some plans vest the match right away. Others use a cliff schedule, where you own 0% until year three and then 100%. Others use a graded schedule, such as 20% after two years, rising to 100% after six.
So check your vesting schedule before you change jobs. If you’re a few months from your next vesting date, waiting could be worth thousands of dollars.
Traditional or Roth 401(k)?
Many company 401(k) plans now offer a Roth option next to the traditional one. With traditional contributions, you skip income tax today and pay tax on withdrawals in retirement. With Roth contributions, you pay tax now, and qualified withdrawals come out tax-free later.
If you’re early in your career and in a low tax bracket, Roth contributions often make sense, because your tax rate today is likely lower than it will be later. On the other hand, if you’re in your peak earning years, the traditional deduction may save you more. You can also split your contributions between both. For your own case, check with a tax professional.
Run your own 401(k) fee check
If you want to see your 401(k) fees in dollars without reading every fact sheet, try the Fee Analyzer in the free Empower Personal Dashboard. You link your 401(k), IRAs, and brokerage accounts, and then you can see your fund fees in one report. Eric Rosenberg ran his own accounts through the tool, moved most of his retirement money into Vanguard and Schwab index funds, and cut his fees by more than $300 a year.
Frequently asked questions about your company 401(k) plan
Check your plan’s fees this week. Then take the full match, pick the cheapest fund, and send any extra savings where you pay the least.
Free guide
Learn how the stock market works, then start
Get my free 2026 guide to stocks, trades, account types, and index funds, plus a step-by-step plan for your first investment.
- How a trade works, from order types to T+1 settlement.
- Why I start with low-cost index funds instead of stock picks.
- The margin rules and my own trading mistakes, so you can avoid the same errors.
Bonus: The First-Investment Checklist, the order to handle your match, debt, and savings
Amazing how we don’t think about fees unless someone breaks them down and show the actual cost of the managing of our retirement accounts.
Very true Jason. Somehow we all think that we’re doing enough just because we contribute. Sure, we might be better than average with this action, but without further research we might be losing tens of thousands of dollars to those pesky fees!