Most Americans probably have no inkling of what kind of fees they are paying in their 401(k) accounts, but the fees can vary widely – and cost dearly over the long term -- depending on overlooked factors, USA Today reported.

Fees generate "reverse compounding" that can reduce a 401(k)’s value, the newspaper said.

In a recent PBS Frontline episode, Vanguard Group founder Jack Bogle gave the example
that over a 50-year period, a consumer with a 401(k) that incurs 2 percent in annual fees and a gross annual return of 7 percent will lose almost two-thirds of the potential nest egg in fees.

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"Expenses are a very important factor in the return on investments over a very long period
of time," Francis Vitagliano, visiting scholar at the Center for Retirement Research at Boston College, told USA Today.

Martin Smith, a Frontline correspondent who worked on the PBS episode, said of financial
services companies that offer 401(k) accounts, "I don't think they go out of their way to explain the consequences of what seems like a small innocent fee."

Sean Collins, senior economist for the Investment Company Institute, said the weighted
average expense ratio was 0.63 percent for equity assets in 401(k)s, and 0.50 percent for bond funds in 401(k)s.

However, USA Today said that level of fees would also be significant over a long time horizon.

Robert Hiltonsmith, policy analyst for Demos, a public policy group in New York, said some investors may mistakenly believe that higher-fee funds are going to give them higher returns, but that a certain fee structure is no indication of future returns.

Lower-cost options for 401(k) accounts include money market funds; bond funds; index
products, such as a Standard & Poor's 500 index fund; and other index funds, USA Today
reported.

The newspaper concluded that Americans "do seem to pay far more attention to the prices
listed for milk and movie tickets than we do to the fees associated with the mutual funds we select for our 401(k) plans."

In a feature on the PBS Frontline episode, Time magazine commented, "Anyone who's been paying attention understands that corporate America has shifted the burden of retirement to individuals over the past 30 years.

"Traditional pensions have been supplanted by 401(k) plans, which have proved to be
massively ineffective as a primary source of retirement security. Billions of dollars in savings have leaked out of these plans over the years and trillions were wiped away in the market collapses of 2000 and 2008."

MarketWatch reported the vagueness of 401(k) fee disclosures became so prevalent that the Department of Labor (DOL) recently took action.

The DOL now requires 401(k) plans to file a Fee Disclosure statement that itemizes fees
connected to investment management, administration and record keeping.

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