What are investment fees?

Investment fees are associated with investment options in a 401(k) plan. There are three basic types of fees that may be charged:

  • Sales charges (i.e. commissions or a “load”): These are charges paid to a broker for buying and/or selling your investment. Mutual funds and other investments can have a front end or back end redemption charge that is paid as a flat fee or percentage of assets to pay these sales “loads.” 
  • Management fees: These are ongoing fees that mutual funds or other investment providers charge for managing investments in the funds, usually charged as a percentage of assets (e.g. a fund’s “expense ratio”). These are usually reflected in the rate of return for an investment.
  • Other fees: Some mutual funds or other investment providers charge fees for recordkeeping, providing statements and advertising that can be charged as a flat fee or a percentage of assets (e.g. 12b-1 fees).  (Be careful of some “no-load” mutual funds which charge 12b-1 fees to pay advertising and broker commissions, as they are charging you for the same purpose as a “load”.)


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