If you work at a small employer, you may be paying high 401(k) fees.

• According to Morningstar research, the smallest 401(k) plans charge fees of 0.88% annually, while the largest charge 0.41% annually.
• The annual fees, which are a percentage of a worker's total savings, can add up to a significant amount of money.

Small business employees who contribute to a 401(k) plan pay twice as much in fees as those working at large corporations in the U.S.

According to a report from the Morningstar Center for Retirement and Policy Studies, the smallest workplace retirement plans charge 0.88% in annual fees, while the largest plans charge 0.41%.

Workers pay annual fees to financial firms for their 401(k) plans, which are automatically deducted from their savings accounts as a percentage of their total contributions.

The retirement system in the U.S. is not as effective for individuals who do not have the fortune of working for larger, well-established companies, according to a study by Aron Szapiro and Lia Mitchell.

In 2019, the most recent year of complete federal data, the study examined median fees. However, many plans within size groups have fees that are lower or higher than the median.

According to Morningstar, over 30% of the smallest investment plans have annual costs exceeding 1%.

The disparity between small and large retirement plans can result in significant financial differences over the course of many years of saving.

Tom Brady's decision to return to the workforce could inspire other retirees to do the same.

According to Szapiro, workers at employers with smaller plans who are saving the same amount as those at employers with larger plans could have around 10% less in assets at retirement due to higher fees.

Businesses with large 401(k) plans have the ability to negotiate lower fees from investment managers and other service providers, as well as adopt investments that are typically lower-cost.

According to Morningstar, 43% of all 401(k) investors have plans offered by just 2,115 employers with more than $500 million.

According to Morningstar, although there are 649,000 small plans with less than $25 million, they make up only 27% of all 401(k) savers.

The remaining savers are located between small and mega plans.

Despite the availability of low-cost 401(k) plans at work for many employees, the system is fragmented and heavily dependent on large corporations for success.

According to Szapiro and Mitchell, the jobs of the future may not be with employers who provide these savings opportunities. Additionally, this concentration highlights the need for policymakers to maintain incentives that these large employers find appealing.