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LINDA WERTHEIMER, host:

Millions of Americans are saving for retirement through 401(k) accounts. These are company-based retirement plans that allow employees to put a portion of their salary into mutual funds or other kinds of investments and save towards retirement.

But 401(k's) and similar plans do have fees, and sometimes they're too high.

Ron Lieber has been writing about this for The New York Times. He is their personal finance columnist, and he joined us to talk more about 401(k) fees.

Welcome, Ron.

Mr. RON LIEBER (Columnist, The New York Times): Thank you for having me.

WERTHEIMER: Now, how serious a problem is this?

Mr. LIEBER: Much depends on where you work, Linda. Depending on the company and how conscientious it is about this, it may have a very low-cost plan or a very high-cost plan. The problem is it's difficult for an everyday employee who is investing money in a 401(k) plan to figure out exactly how expensive it is and how the different expenses break down.

WERTHEIMER: Well, could you just explain what the consequences are of a relatively high fee? I mean, give us an example. What would it mean?

Mr. LIEBER: Well, here's the problem. Let's say you're paying one-and-a-half percent of your balance each year towards fees and expenses from your 401(k) account.

WERTHEIMER: The fees and expenses would be, like, the management of the accounts, recordkeeping, that sort of thing?

Mr. LIEBER: Exactly. Its administrative costs. It's recordkeeping. Plus, it's the underlying fees for running the mutual funds or other investments that you're invested in. So all of that kind of gets lumped together.

WERTHEIMER: Okay. So you said, say it's a 1.5 percent fee.

Mr. LIEBER: Right. So the problem is is that if you're losing that much money each year, over time, and you're investing over many decades in these funds, it's a lot of money to be losing each year. I mean, it's, you know, $1,500 out of a $100,000 balance each year. And so as your money grows, those losses compound. It could end up being six figures, over $100,000 by the time you are done and are ready to retire.

WERTHEIMER: So how do you know if the fees in your plan are unreasonable? I mean, 1.5 percent sounds tiny.

Mr. LIEBER: Well, that's a big problem. The law says that the fees most be quote-unquote "reasonable." And there have been some lawsuits trying to establish when they are excessive. But a good baseline is that, you know, if your plan costs under 1 percent, that's at least halfway decent. If it's more than that, it's time to start asking questions.

WERTHEIMER: So what should employees do about this? I mean, say that they find out what the fees are. What then?

Mr. LIEBER: Well, I think the first thing you do is you need to figure out who it is in your employer that's responsible for the retirement plan. And you need to go to them in a polite way, right? I mean, you don't want to accuse them of being ignorant. What you want to say to them is say, hey, we're all in this together, here. Your retirement's on the line, as well. And right now, we're paying you 1.25 percent or 1.5 percent. And I bet if we looked hard at this and put it out for bid and looked at some other organizations that might be able to help us, we might be able to lower costs.

Or failing that, you can say to them, well, at least give me more options in my plan to invest in index funds, because those are cheaper and I'll be able to, you know, avoid paying a lot of these if I have those options available to me.

All sorts of companies, including big companies, don't give their employees a full suite of index funds to select from. So you don't even have the option of making the choice for yourself.

WERTHEIMER: Thanks very much.

Mr. LIEBER: Thank you for having me.

WERTHEIMER: Ron Lieber is personal finance columnist for The New York Times. We reached him at his office in New York City.

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