More than four in ten American workers have no idea they’re paying fees on their 401(k) retirement accounts, according to a U.S. Government Accountability Office survey that continues to be cited in 2025 industry reports. The finding highlights a troubling reality: hidden charges are silently eroding retirement savings while most participants remain completely unaware.
The GAO study found that 41% of 401(k) participants incorrectly believe they pay no fees at all. An additional 40% don’t fully understand the fee information their plans are required to provide. This widespread confusion is costing workers dearly, with research suggesting fees can consume nearly one-third of investment returns over a lifetime.
The staggering cost of not knowing
The impact of these hidden fees compounds dramatically over time. According to analysis by The Pew Charitable Trusts, a 2% fee difference can cost a worker $306,000 over a 40-year career. That’s equivalent to working more than five additional years at a $60,000 salary.
A separate study from the policy research organization Demos estimates that over a lifetime, fees can cost a median-income two-earner family nearly $155,000 in lost retirement savings.
Even small fee differences matter significantly. Pew’s research shows that a 1% annual fee difference can reduce a retirement account balance by 30% over 40 years compared to a low-fee alternative. For workers in their 20s just starting to save, these seemingly small percentages translate into massive losses by retirement age.
Where the money actually goes
The Department of Labor categorizes 401(k) fees into three main types that chip away at retirement balances.
Investment fees, shown as expense ratios, cover the cost of managing mutual funds and ETFs within the plan. According to a 2024 report from BrightScope and ICI, the average 401(k) participant was in a plan with a total cost of 0.49% of plan assets. However, some funds charge well over 1%, which experts consider excessive.
Administrative fees pay for recordkeeping, accounting, and customer service. These can be charged as flat annual amounts or as percentages of assets. Individual service fees cover specific actions like taking out loans or processing hardship withdrawals.
The problem is compounded when workers leave jobs without consolidating their accounts. According to CNBC reporting from June 2025, nearly half of employees leave money in their old plans during work transitions. Former employees who don’t take their 401(k) with them could face additional nonemployee maintenance fees.
A PensionBee analysis found that a $4.55 monthly nonemployee maintenance fee can add up to nearly $18,000 in lost retirement funds over time. With over 30 million 401(k) accounts currently unclaimed, the potential losses are enormous.
Why transparency efforts have fallen short
Federal regulations have required fee disclosures since 2012, yet confusion persists. The Department of Labor mandates that plans provide participants with detailed fee information through 404(a)(5) disclosures at least annually, plus quarterly statements showing actual charges.
However, the GAO found this information is often too complex for the average worker to understand. Nearly half of participants surveyed couldn’t use disclosure information to determine the actual cost of their investment fees. The information tends to be scattered across multiple documents and presented in technical language.
The GAO has recommended that the Department of Labor require plans to include fee benchmarks in disclosures, showing how a fund’s costs compare to similar options. The agency also suggested providing more information about fees’ cumulative effects over time. Implementation of these recommendations could help workers make better-informed decisions.
How to find your hidden fees
Workers concerned about their retirement savings can take several steps to uncover what they’re actually paying.
Start by locating the annual 404(a)(5) participant fee disclosure, which employers must provide. This document contains plan-related information about administrative fees and investment-related details about each fund option. Check quarterly statements as well, which should show actual dollar amounts deducted from accounts.
Look for expense ratios on each fund, keeping in mind that anything above 1% may warrant scrutiny. The average expense ratio for equity mutual funds in 401(k) plans was just 0.26% in 2024, according to industry data, so significantly higher rates suggest room for improvement.
Workers with old 401(k) accounts from previous employers should consolidate them to avoid paying multiple sets of fees. Options include rolling funds into a current employer’s plan or into an Individual Retirement Account, though IRA fees should be compared carefully since they can sometimes be higher than workplace plans.
What’s next
The retirement industry appears to be moving toward greater transparency and lower costs. Vanguard announced fee cuts across multiple funds in 2025, estimating over $350 million in savings for investors. Other providers may follow as competition increases.
Secure 2.0 legislation continues rolling out provisions designed to help workers save more effectively. Starting in 2025, new 401(k) plans must automatically enroll eligible employees, which could increase participation rates. The Department of Labor also launched a retirement savings lost and found database to help workers track down old accounts.
For the 41% of workers who don’t realize they’re paying fees, awareness remains the first critical step. Financial experts recommend reviewing retirement accounts at least annually, comparing fund costs to industry averages, and asking plan administrators for clarification on any unclear charges. The money saved by paying attention to fees today could mean years of additional financial security in retirement.
