Many 401(K) retirement plans have hidden fees that can cut into your savings.

When you’re saving in your 401(k) retirement plan, it’s easy to keep tabs on your returns and your account balance. These numbers are often prominently displayed on your plan’s website or in the statements you receive.

But when was the last time you looked closely at how much you’re paying in 401(k) fees? Chances are, not lately. Roughly three-quarters of 401(k) participants don’t know how much they are paying for their plans, according to a recent survey by TD Ameritrade, an investing services company. More than a third of participants believe they aren’t paying any costs for their plan.

Fact is, you are paying 401(k) fees, including administrative and investment costs, and they are not always clearly disclosed. The numbers may look small, but ignoring these expenses can be risky to your retirement because they can really add up over time.

A Government Accountability Office analysis found that someone who invests a $20,000 balance over 20 years in a 401(k) plan that costs 1.5 percent year is likely to come away with 17 percent less than someone in a plan that costs just 0.5 percent.

The good news for investors is that 401(k) administrative and investment costs have been coming down, at least on average. Some 40 percent of employers lowered their 401(k) fees in 2017, compared with 32 percent that lowered their fees the previous year, according to a recent survey (PDF) by Callan, an investment consulting firm. 

More on 401(k) Plans

Investors are also benefiting from a decline in mutual fund fees, which fell by 8 percent last year, the largest drop ever in a single year, a recent study by Morningstar shows. The shift to lower investment costs is being driven in part by competition from bargain-priced index offerings—Fidelity, for one, recently launched zero-expense-ratio mutual funds.

Still, you may not find those ultracheap options in your 401(k). While plans offered by most large employers tend to have low costs, thanks to economies of scale, many midsized and small plans carry high fees, and they may be hard to spot, says Brooks Herman, vice president of data and research at BrightScope, which tracks and rates 401(k) plans.

Fighting these kinds of high and hidden expenses is why Consumers Reports is launching a program called “What the Fee?!” The goal is to highlight surprising charges—and help consumers fight back.

To help lower your 401(k) costs and boost your retirement savings, consider these three strategies: 

Estimate Your Plan Costs

Start by examining your 401(k) account statement, which is available online or mailed to you on at least a quarterly basis. You will also receive a participant fee disclosure notice (PDF) at least annually that provides the total expenses of your plan. These documents will show your funds’ expense ratios (the annual percentage of your assets deducted for management costs) as well as your plan’s administrative fees, Herman says.

It’s also important to check for any red flags that may indicate that your costs are higher than they should be. For example, some funds charge an additional layer of expense called 12b-1 fees—these are partially used for marketing costs and typically run 0.25 percent a year. That information may be lumped in with the expense ratio, making it hard to spot. But you can find it broken out in the fund’s prospectus, as well as in the annual report, along with any commissions to buy and sell the fund. 

What to do: Once you know your 401(k) plan’s all-in costs, see how they stack up compared with plans of similar size. As a guideline, very large plans—those offered by Fortune 500 companies, for example—typically charge rock-bottom fees that average 0.5 percent or less, says Bob Morrison, a fee-only certified financial planner with Downing Street Wealth Management in Denver.

By contrast, plans run by small businesses, which lack economies of scale, may cost 1.5 percent to 2 percent. You may be able to find specific cost comparisons for your company’s plan at BrightScope.

Choose Low-Fee Funds

One of the easiest ways to lower your costs is to look for cheaper investment options. Typically, the biggest bargains will be found among index funds, which mirror the performance of a market benchmark, and often charge just 0.3 percent to 0.5 percent. In part because of their cost advantage, index funds tend to outperform actively managed funds over midterm and long-term periods, reports show.

If you work for a large employer, you may have another low-cost option: institutional funds, which may include lower-cost share classes of retail funds or collective investment trusts, which are funds designed and managed for the plan. Because of their larger asset size, institutional funds are generally priced more cheaply than their retail fund equivalents, Morrison says. 

What to do: If your employer offers an array of low-cost index funds or institutional funds, you can use them to build a diversified portfolio. Or you may have access to index funds in your plan’s target-date fund, if one is offered. These funds hold a preselected asset mix geared to your retirement date—just make sure the target-date fund’s overall costs are low.

If you lack those options, see whether your 401(k) offers a self-directed brokerage window that allows you to opt for other investment choices.

Consider an Escape Hatch

What if you’re stuck in a 401(k) that carries exorbitant fees—say, 1.5 percent or more? Depending on how long you plan to stay with your employer, you may want to do some of your saving elsewhere, because these costs will erode your nest egg over time.

“If you have a bad plan, invest enough to get the full employer match, if one is offered,” Morrison says. “Then invest outside of it.” 

You can stash additional savings in low-cost funds through a Roth IRA, if you’re eligible, or a traditional IRA. If you’re married and your spouse has a better plan, be sure to max out those contributions. If you have more money to put away, you can contribute to your 401(k) for the tax benefits, or save in tax-efficient investments, such as a municipal fund, in a taxable account. 

What to do: Lobby your employer for a better plan, with lower 401(k) fees. Under federal law, employers have a fiduciary duty to offer reasonably priced options and to monitor the quality of the plan. Having done your research, you can make the case for improvements. Your managers may be receptive—after all, they probably have money in the plan, too.