The Hidden Costs Inside Your 401(k)

Most people think of their 401(k) as a straightforward system: you contribute, choose investments, and let time do the work.

But there’s an important detail that often gets overlooked: you choose your investments, but you don’t choose the menu you’re choosing from.

In a 401(k), investment options are pre-selected by your employer, working with plan providers and advisors. While these menus are designed to be helpful, the quality and cost of the available options can vary more than most people realize.

Research has shown that many plans include higher-cost funds that don’t outperform lower-cost alternatives, even within the same plan. Over time, these differences can have a meaningful impact.

In this video, we cover:

• How 401(k) investment menus are built
• Why some plans include higher-cost or underperforming options
• What research says about fees and fund selection
• How small cost differences can compound over time

Even a seemingly small difference—like 1% in annual costs or returns—can result in significantly less wealth over the course of a career.