Most 401k retirement accounts charge a fee for account management. The amount of this fee is stated as “basis points.” A single basis point represents 1/100th of one percent of the total value of your 401k. You can calculate these fees by converting the basis points into a dollar amount based on the overall value of your 401k account.
Determine the actual value of your 401k account. For example, assume the value of your 401k is $250,000.
Determine the basis point fee charged for management of your 401k account. For example, assume this fee is five basis points.
Convert the basis point fee to a percentage by multiplying the basis points by .01. Continuing the same example, 5 multiplied by .01 equals .05.
Multiply the basis point percentage from Step 3 by the value of your 401k. Concluding the example, $250,000 multiplied by .05 is $12,500. This figure represents the management fee assessed on your 401k account.
- "Principles of Finance"; Scott Besley and Eugene Brigham; 2008
- MathIsFun.com: Percentage Points
- Board of Governors of the Federal Reserve System. "Open Market Operations." Accessed July 30, 2020.
Since 1992 Matt McGew has provided content for on and offline businesses and publications. Previous work has appeared in the "Los Angeles Times," Travelocity and "GQ Magazine." McGew specializes in search engine optimization and has a Master of Arts in journalism from New York University.