by KYW's Salil Gutt

Most of us are clueless about how much we're paying in fees in our 401k plan. The financial services industry would like to keep it this way.  Don't be naive to think that someone else like your employer is paying for this. These fees and expenses are coming straight out of your pocket and will reduce your retirement savings significantly in the long run.

The largest fees are investment fees. This is expressed as a percentage. The average stock fund has an expense ratio of 1.3% and the average bond fund around 0.7 %.  An index fund will typically have an expense ratio that is at least 1% less than an actively managed stock fund.

The impact of the extra 1% in fees is significant. Depending on your age when you started in the plan, your total savings could be almost a third less with the high fee plan.  Recent court rulings have indicated that employers could be held to breach of fiduciary responsibility if the fund is loaded with high expense offerings. This generally tends to be the case with small to medium sized employers who do not have the leverage large companies have.