Hidden 401(k) fees can lead to significant losses in retirement savings for workers.

The trend of job hopping among Americans, particularly following the Great Resignation, has led to an increase in forgotten 401(k) plans. Recent studies reveal that by 2023, about 29.2 million 401(k) accounts were left behind, totaling approximately $1.65 trillion in assets.

This marks a significant 20% rise from two years ago. Nearly half of employees tend to leave money in their previous plans during job transitions.

However, there are downsides to this practice. A survey by the U.S. Government Accountability Office found that 41% of workers are unaware they are incurring fees on their 401(k) accounts.

While most 401(k) fees are relatively low, additional charges can apply to accounts left with former employers. Romi Savova, CEO of PensionBee, highlights that these additional maintenance fees can dramatically erode retirement savings over time.

When changing jobs, employees typically have several options for their old 401(k) funds. They can transfer the balance to a new employer-sponsored plan or roll over the funds into an Individual Retirement Account (IRA).

However, IRAs often come with higher investment fees that, over time, can cost workers significantly, with estimates suggesting collective fees might reach $45.5 billion over a typical retirement span. To locate forgotten 401(k) accounts, employees can utilize resources from the Department of Labor, which has established a lost and found database for retirement savings.

Furthermore, organizations like the Portability Services Network aim to facilitate automatic transfers of small-balance 401(k)s to new workplace accounts, thereby helping to consolidate retirement savings and avoid the risks of losing track of old plans.