The just-released 25th Edition of the 401k Averages Book confirms a continuation of a long-running industry trend: both investment and recordkeeping fees are steadily declining, helping drive lower total plan costs for employers and participants.
Average investment-related fees decreased across all plan sizes, with reductions ranging from 0.02% to 0.12%, reinforcing the long-term trend toward lower participant costs. Many plan scenarios saw reductions in recordkeeping fees, in some cases by as much as 0.03%, reflecting ongoing pricing competition and transparency demands.
“This year’s edition reflects today’s more complex fee structures and offers essential context for evaluating 401(k) plan pricing,” said Joseph W. Valletta, CFA, co-author of the 401k Averages Book.
Now in its 25th year, the publication continues to serve as a vital resource for retirement plan fiduciaries, advisors, and service providers seeking clarity on 401(k) plan costs.
“A quarter-century in, our mission is unchanged: deliver clear, objective data to help fiduciaries benchmark fees and fulfill their oversight responsibilities,” Valletta said.
Among the key findings from the 25th edition, plan advisor fees either declined or remained unchanged in all plan size scenarios, with an overall average drop of 0.01%, an indicator of increasing fee compression.
Smaller plans still pay significantly more in fees than larger plans. A $5 million plan averages 1.08% in total costs and 0.37% in advisor compensation, while a $50 million plan averages 0.76% and 0.16%, respectively.
In a press release announcing the 25th Edition, Valletta noted that wide fee disparities underscore the importance of benchmarking. In a notable example, total plan costs for a $1 million plan with 100 participants range from 0.87% to 3.56%, depending on provider and structure, highlighting the critical need for regular benchmarking.
The new 401k Averages Book includes 24 plan scenarios covering plans with 10 to 2,000 participants, and updated fee benchmarks for investment, recordkeeping, and advisor compensation. It also has Infographics illustrating fee trends and per-participant costs for small plans, .
First published in 1995, the 401k Averages Book from Baltimore, Md.-based Pension Data Source, Inc., is the only independent benchmarking book focused exclusively on 401(k) plan cost data. The 25th Edition is available for $95 at www.401ksource.com or by calling (888) 401-3089.
SEE ALSO:
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• Target Date Trends: 15% Growth in 2024; Fees Continue to Fall
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.