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During my work years I had couple of 401 K plans with my employers. My current plan charges higher fees then any of previous plans. Recently there appeared one more so called "Bookkeeping fee" deducted quarterly from my account.

What services would a "bookeeping fee" include?

Do other 401k plans have such fees?

When I called my plan representative for explanation, I did not get a clear answer. Seemed that person was not aware of this fee because stated "Yes, I see, you did not have a fee like this before". Of course, we do not have a choice or say...if we want to invest, have just "have to take it".

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    A fee, is a fee, is a fee. This is why it is advantageous to roll over 401K plans to free brokers such as Vanguard, Fidelity, and Schwab. – Pete B. Feb 12 '18 at 17:04
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401(k) plans often have various fees, called Plan Administrative fees, to support the day to day operations of the plan. While I've not seen one explicitly called "bookkeeping", that's sufficiently close to "record keeping" that I suspect it's covering the same thing.

The name of the fees don't really matter, in the scheme of things; all of the fees that are not investment fees (transactional costs for investors and/or for the plan) or individual fees for particular services (like a 401(k) loan or other specific actions you choose to take) will fall into "plan administrative fees". These basically pay the plan administrator to support their overhead costs and give them some profit. Obviously, it would be ideal for these in aggregate to be as low as possible. I wouldn't get hung up over the names of the fees, only look at the total amount as a percentage of the investments.

Look at this example explanation of fees for examples of the different kinds of fees, and some explanation for the IRS rules relating to disclosing them.

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401(k) plans are employer-sponsored entities. While a very large employer might administer well administer the plan in-house, most employers adopt 401(k) plans that have been created by various companies that offer to serve as administrators for the plan subject, of course, to various fees. Typically, the employer pays all of these fees, but, depending on the plan being adopted, some fees might be passed on to the participants in the plan.

So, why all of a sudden new fees? Well, the employer might have adopted a different plan from the same company this year, and the new fee structure is that participants pay some of the fees that employers paid with the previous plan. Since it is early in the new year, this might be a reasonable explanation. Note that these fees are separate from things like the expense ratio charged by any mutual funds that are made available to the participants through the 401(k) plan.

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All 401k plans charge fees (there is no such thing as a free lunch).

If you are lucky, your employer covered them for you; but chances are, you paid them all the time, and never knew (because you didn’t read all the fine print on page 423 of 987), as until 2017 they were typically hidden in the share values of the funds you invested in.

Since some months (or starting pretty soon), it is required to explicitly show them, and therefore millions of people will see such fees deducted in their 401k now. That does not change anything; the share value will now be slightly higher, and the amount of shares you own will be slightly less (because some get taken from you to cover the fee).

The fees range typically between about 0.05% per year and basically ‘unlimited’ (I have seen up to 1.9%, but I didn’t check the really bad providers). Compare different providers, and move your money accordingly if you have cheaper choices, as these fees can make a significant dent in long term investments - you could have 2200 $ a month when you are retired or 1800$, for the same input, depending on what provider you chose.

  • I don't get the impression that the OP claims never to have paid any fees, just not this particular one. – Joe Feb 12 '18 at 23:10

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