Average total plan cost and investment fees for 401(k)s continue to decline, according to the latest edition of the 401(k) Averages Book.
“All scenarios saw a year over year decrease in total investment costs”
Total investment costs declined between 0.01% and 0.06% from last year, with the average representing a decrease of 0.03%, the book, now in its 22nd printing, finds.
“This decline in investment-related fees paid by participants will help boost retirement savings over the years,” author Joseph Valletta said in a statement.
Small retirement plan (100 participants/$5,000,000 assets) fees declined from 1.20% to 1.19%. Since 2017 small plan total plan costs have dropped 0.06% from 1.25%.
“For years there has been an increased awareness around the impact 401(k) fees have on long-term savings,” Valletta added. “The trend in lower fees shows that employers and their advisors have been working to reduce the drag caused by these fees.”
Key Findings
- Large 401(k) Plan Fees: Large retirement plan (1,000 participants/$50,000,000 assets) fees declined from 0.90% to 0.88% over the past year and are down from 0.95% in 2017.
- Small 401(k) Plan Fees: Small retirement plan (100 participants/$5,000,000 assets) fees declined from 1.20% to 1.19% over the past year and are down from 1.25% in 2017.
- Investment fees continue to decline: All scenarios saw a year over year decrease in total investment costs ranging between 0.01%-0.06%, with the average representing a decrease of 0.03%.
- Smaller plans pay higher fees than large plans: The small plan with $5,000,000 in assets costs 1.19%, while the plan with $50,000,000 in assets is 0.88%.
- Plans with smaller average account balances pay more than those with larger balances: A $20,000,000 plan with 2,000 participants has an average total plan cost of 1.19%, while a $20,000,000 plan with 200 participants has an average total plan cost of 0.94%.
- Wide range between high and low-cost providers: The range of cost is greatest within the small plan market. The range of a plan with $1,000,000 in assets and 100 participants ($10,000 average account balance) is 0.72% to 2.69%.
MORE INFORMATION ON THE BOOK AND DATA IS FOUND HERE
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.