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Benefits Beginner: Introduction to 401(k) Plan Fees

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1.
In a 401(k) plan, commissions would be covered under which type of fee?
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Investment fees. Commissions cover the buying and selling of investments; therefore, you pay for them as part of your investment fees.
2.
The document that describes the underlying investments in a 401(k) plan is called _______.
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The prospectus. The other two reports refer to the 401(k) plan itself.
3.
401(k) plan fees will have a negligible effect on your account balance over many years.
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False. Over many years, even small fees will really eat into your account balance.
4.
If your 401(k) plan is an index fund, it is _______ managed.
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Passively. Because index funds are made of the same investments that are in market indexes, they change very little.
5.
Employers are required by law to ensure that 401(k) plan fees be reasonable.
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True. This is one of their duties under the Employee Retirement Income Security Act, or ERISA.
6.
Which type of fund in a 401(k) plan is offered by an insurance company?
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Variable annuity. Annuities are set up by insurance companies and therefore have insurance characteristics about them.