For decades, retirement accounts such as 401(k)s and IRAs have helped millions of working Americans save for a comfortable and rewarding retirement.

But one major obstacle can prevent you from making the most out of your hard-earned savings: Fees.

And even what seems like a small fee can take a serious bite out of your savings.

Consider an investment portfolio that starts with $100,000 and achieves a 4 percent annual return over 20 years, and has one ongoing annual fee.

In 20 years, a 1 percent annual fee reduces that portfolio’s value by about $30,000, compared with the same portfolio if it had a 0.25 percent annual fee.

But don’t expect just one flat fee. When it comes to retirement accounts, fees can come in all shapes and sizes. They may be charged once, monthly, or annually.

And not all are as obvious. You may encounter account maintenance fees, expense ratios, 12b-1 fees and more.

Understanding what these fees are and how they work is crucial to maximizing your savings. So let’s break it down.

IRA Fees

Fees can apply to all types of individual retirement accounts (IRAs) including Roth IRAs, SEP IRAs, and SIMPLE IRAs.

But the good thing is that you can shop around for IRAs with the lowest fees. Some brokerages, banks, and investment firms offer lower fees than others. So let’s take a look at what to compare.

You may owe a fee just for opening an account. These account setup fees can range from around $25 to $50. However, many brokerages and banks waive these.

But moving forward, you may owe annual or monthly account maintenance fees. These can be flat fees or charged as a percentage of assets in your account. However, many brokerages waive these fees as well.

But if you want to close your account, you’d likely owe an account closing fee. These are typically around $100.

Additionally, you may be charged transaction fees. Some providers charge commissions when you buy or sell securities such as stocks and exchange traded fund (ETF) shares. The good news is that these types of commissions are largely a thing of the past. Many brokerages have done away with them.

Investment fees, however, are typically not under the control of your IRA provider. Many IRA portfolios are largely made up of mutual funds and ETFs.

These funds charge expense ratios. These annual fees basically cover the overall management costs of the fund.

Funds usually pay these expenses out of fund assets, rather than by charging investors directly. But the expense ratio is crucial because it represents a portion of your investment’s value that you won’t keep.

Suppose a fund charges a 0.50 percent expense ratio. That means you'll essentially lose $5 annually for every $1,000 invested in that fund. Over time, that can add up.

So when you’re evaluating funds, it’s important to pay close attention to the expense ratio.

The average expense ratio for equity mutual funds was 0.40 percent in 2025, according to the latest research by Fidelity Investments. And the average expense ratio for equity ETFs was 0.14 percent.

Many passively managed index funds are known for having low expense ratios. Some can be around 0.06 percent or lower. Index funds aim to mimic the performance of a given index such as the S&P 500, which contains the largest publicly traded companies in the United States.

But higher expense ratios are typically associated with actively managed funds, which seek to outperform such indexes.

You can find a fund’s expense ratio by looking at its fund prospectus or by visiting the fund’s official website.

Marketing costs called 12b-1 fees, which are capped at 1 percent annually, are cooked into the expense ratios of mutual funds.

But it’s also important to note that some mutual funds charge sales loads. Also called sales charges, these are fees or commissions investors pay when they buy or redeem shares of a mutual fund.

Mutual fund sales loads are usually used to compensate outside brokers that sell mutual fund shares. It’s not a very common practice today.

401(k) Fees

The same investment fees such as expense ratios would apply to the securities that you invest in through your 401(k).

But some fees are specific to 401(k) plans. And while they are largely unavoidable without changing jobs, it’s still important to know what they are.

Among these are plan administration fees. These fees cover the costs of running the plan, such as recordkeeping, accounting and legal services, as well as plan-specific expenses, including customer service and financial educational tools available to participants.

Some employers cover a portion of these fees. But they can also be charged in various ways such as a percentage of assets in the entire plan.

Under rules established by the Department of Labor, employers are required to provide you with detailed fee disclosure statements regarding their 401(k) plans. They also have a fiduciary duty to act in the best interests of their employees and keep fees reasonable.

Moreover, some plans may charge fees for optional services such as the following.

• Hardship withdraws

• 401(k) plan loans

• Rollovers

• Access to professional investment advice

The Bottom Line

Retirement accounts can be invaluable tools that could help you save for your Golden Years. But high fees can seriously erode decades of hard-earned savings. So if you’re shopping around for an IRA, try seeking out brokerages that waive account opening and account management fees, as well as commissions on trading stocks and ETFs. And consider investing in low-cost funds. If you have a 401(k), look into your fee disclosure documents to see if all seems right.

The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.