Do you know what fees you are paying for your 401(k)? There are a lot of costs associated with having a 401(k) plan and it is important for your financial security to be aware of charges accruing over the years, especially since retirement funds accumulate for decades and so do those fees.

In a recent study, NerdWallet Investing discovered that there is lacking information in the public’s general understanding of 401(k) plans and how they operate. For example, 92.6 percent of survey participants underestimated the amount of fees paid during the life cycle of their 401(k) – an amount that can go up to $150,000, which could make a huge difference for some families.

Fees to Expect:

There is a three-layer 401(k) fee structure that is standard among most funds. The first two fees relate specifically to your plan while the plan-level fees include charges from the actual plan provider.

1) Expense ratio: This is a measure of the fund’s total annual operating expenses and is the most common fee you will encounter. This may be the most prominent fee but it is certainly not the only fee. This fee should be clearly noted on your fund statement because it does not vary much year-to-year.

2) Other mutual fund-level fees: Other costs could include purchasing a fund and associated trading costs. These fees should be displayed prominently on your 401(k) statement as well.

3) Plan-level fees: These fees pay for plan providers and administrative costs.

What You Can Do To Control Fees:

The less fees you pay along the way, the more money you could have upon retirement. Also the more you educate yourself about fees relating to your account, the fewer surprises you will have when you need this investment.

1) Pick funds with low expense ratios: When choosing what funds out of your 401(k) plan you want to invest in, you want to choose funds with a low expense ratio. Think of these fees like this: if someone runs a marathon with a 25 lb. backpack, the weight will bring them down, just like annual fees can weigh down the potential of your 401(k)’s total return.

2) Compare and rank 401(k) fund offerings: Keep in mind that a fund’s past performance does not guarantee future results. You should also consider metrics such as the risk adjusted return, relative outperformance and volatility.

To check a fund’s expense ratio in addition to these other key performance metrics, try using NerdWallet Investing’s 401(k) screener tool which allows you to compare the funds in your employer 401(k) plan side by side to pick the best one.

3) Identify and understand hidden fees---and take action: It may seem like heavy lifting to identify all applicable fees associated with your 401(k) fund, but it is worth the work in the beginning so you can confidently know you did everything possible to make the most out of your investment. Here are some steps you can take to figure out if you are paying excessive fees for your mutual fund:

• Consider saving for retirement in other funds, such as a Roth or traditional IRA or using your spouse’s retirement account if the fee schedule is more reasonable for your situation.

• Research index funds with low expense ratios. This will cost you less money in fees over time than investing using actively managed funds which on average have higher expense ratios.

• If your research shows that the 401(k) funds in your retirement package that are all from the same fund family are performing poorly, you may want look for another plan trustee.

• Not all no-load funds have the same terms, so research your specific terms so you understand what you have signed up for. FINRA allows a fund to charge up to 0.25 percent of its average annual net assets in 12b-1 fees and still call itself a no-load fund.

You work hard for your money and you should get the most out of your investments. While the research certainly can be time consuming, it will pay off in the end.

By Neda Jafarzadeh, a financial analyst with NerdWallet Investing. NerdWallet Investing provides consumers with useful financial guidance, like how to roll over a 401(k).

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