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Check 401(k) Fund’s Documentation for Hidden Fees

Dear George: I contribute regularly to my company’s 401(k) plan. However, I find it very hard to determine what fees and expenses are charged for this account. Where can I get more information?

, Jeff, El Cajon

Dear Jeff: First, congratulations on your decision to fund your company’s retirement plan. This is a very important step toward securing your financial future. And, accordingly, it is very important to understand all of the expenses that are involved with this investment program.

As is the case with mutual funds, the expenses associated with 401(k) plans can dramatically impact the return on your investment. Consider this: An employee with 35 years until retirement who has a current 401(k) account balance can expect to see the account grow to $227,000, assuming a 7 percent return and expenses averaging 0.5 percent. However, if the costs come in at 1.5 percent the account will only grow to $163,000.

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Unfortunately, tracking down the fees and expenses tied to a company retirement plan can be quite a challenge. The information is included in the plan prospectus. The trick is getting a copy of that report. Your plan administrator should make the prospectus available, but it isn’t always at hand.

If you strike out trying to get a prospectus the next step is request a couple of forms that are legally required to be prepared each year. The Summary Plan Description tells you what the plan provides and how it operates. You should receive this report when you join the plan. If there are no major changes to the plan you won’t get another copy for 10 years.

Another detailed summary of the plan is the annual report (Form 5500). This is a detailed discussion of the entire operation of the plan and its operations.

So, what kind of fees are usually collected by a 401(k) plan? There are usually two types of expenses. First, administrative fees are charged to cover the day-to-day operations of the plan. Additionally, there may be charges for the investment operations of the 401(k). They can include sales charges, management fees and other expenses.

The Department of Labor publishes several brochures to help people who participate in pension plans. You can access the information on the Internet (www.dol. gov) or by calling 1-800-998-7542. Request a copy of the booklet, 401(k) Plan Fees for Employees.

Dear George: Would you please refresh me on the so-called Super Bowl Indicator and what it means for the stock market?

, Keith, San Diego

Dear Keith: Investors today are looking for any possible key to the course of the stock market and the result of the big game are just about as good as any other forecasting tool.

Wall Street analyst Robert Stovall first discovered the trend that found that a win by the team from the National Football Conference is a positive omen for the stock market in the following year. A victory by the American Football Conference team suggests that stock prices may be headed lower.

This strategy has been amazingly accurate. However, the last two years have thrown cold water on the Super Bowl theory. Back-to-back wins by the Denver Broncos , representing the AFC , have proven the strategy to be vulnerable. The wins were supposed to trigger market declines; however, the opposite has occurred. Just about every market indicator has closed at repeated record highs.

So, unless you really have a favorite team in Super Bowl XXXIV, you may want to root for the Rams over the Titans.

Chamberlin is the host of “Money in the Morning,” heard weekdays from 9 a.m. to noon on Ksdo.com A/M 1130. Send letters to P.O. Box 1969, Carlsbad, CA 92018, or E-mail him at (george@moneyinthemorning.com).

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