Updated 27 March 2026
403(b) Fees vs 401(k) Fees
403(b) plans cost 1-1.5% more per year than 401(k) plans on average. Over a 30-year career, that 1% gap costs you $100,000+ in lost retirement savings.
Fee Comparison
| Fee Type | 403(b) | 401(k) | Why |
|---|---|---|---|
| Expense ratios (investment funds) | 0.5-2.5% (annuity-heavy) | 0.03-1.0% (index fund options common) | The single biggest difference. 403(b) plans historically offered annuities with high embedded fees. |
| Mortality & expense (M&E) charges | 0.5-1.5% (annuity contracts only) | Rare (not annuity-based) | Annuity insurance charges that 403(b) holders pay and 401(k) holders typically do not. |
| Surrender charges | 5-8% if withdrawn early (annuities) | None (mutual funds) | Annuity surrender periods can lock your money for 5-10 years with declining penalties. |
| Administrative fees | $0-$100/year | $0-$100/year | Similar. Both may charge annual account maintenance fees. |
| Loan fees | $50-$75 per loan | $50-$75 per loan | Similar when both plans offer loans. |
| Total annual cost (typical) | 1.5-2.5% of balance | 0.5-1.0% of balance | The 1-1.5% gap compounds devastatingly over 30 years. |
What 1% Costs Over a Career
$50K balance, 1% fee difference, 30 years
-$105,000At 7% return minus 1% fee vs 7% return minus 2% fee, the higher-fee account has $105K less after 30 years.
$100K balance, 1.5% fee difference, 25 years
-$195,000A teacher with $100K in a 2.5% fee 403(b) vs a 1.0% fee equivalent loses nearly $200K by retirement.
$200K balance, 1% fee difference, 20 years
-$155,000Even at $200K with 20 years left, a 1% fee difference destroys six figures.
How to Check Your 403(b) Fees
Find your plan's investment options
Log into your 403(b) provider's website. Look for the list of available funds/annuities.
Check expense ratios
Each fund lists an expense ratio. If it is above 0.5%, you are paying more than you should. If you see 'mortality and expense' charges, you are in an annuity contract.
Ask for the fee disclosure document
Your employer is required to provide a fee disclosure. It lists every charge: fund expenses, admin fees, and any annuity charges. Request it from HR.
Compare with a low-cost alternative
Check if your plan offers any index fund options (target date funds, S&P 500 index). Some 403(b) plans now include Vanguard or Fidelity options alongside the old annuity products.
Advocate for better options
If your plan only offers high-fee annuities, write to your employer or union. Many school districts have switched to low-cost providers after teachers demanded better options. The 403bwise.org site tracks plan quality.