401(k) Plan Fees Declining, But Small Plans Still Pay More

401k plan fees declining

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Investment-related fees paid by 401(k) plan participants continued to decline in 2022, according to the new release of the 401k Averages Book 23rd Edition.

Total investment costs declined between 0.02%-0.05% from last year, with the average representing a decrease of 0.03%.

“The benefits of the trend in lower investment fees will pay significant dividends to participant balances in the long run,” said Joseph W. Valletta, author of the 401k Averages Book.

The book of averages found small retirement plan (50 participants/$5,000,000 assets) fees declined from 1.12% to 1.09%. Since 2018 small plan total plan costs have dropped 0.08% from 1.17%.

“We are encouraged to see fees continue to decline for participants in small 401(k) plans. Small business employers have a lot on their plate with deciphering SECURE 2.0, but small tweaks to their plan’s investment menu and fees can generate significant savings for their employees,” Valletta said.

401k Averages Book key findings

This year’s edition of the 401k Averages Book includes 24 sections with charts detailing average 401(k) fees for plans with 10, 25, 50, 100, 200, 500, 1000 and 2000 participants.

It also includes three infographics illustrating small plan costs. Each infographic (see example below) shows the 5-year trend of plan costs, range of participant costs and other key data points.

Published since 1995, the 401k Averages Book is designed to provide financial professionals with essential 401(k) cost information needed to determine if their 401(k) plan costs are above or below average. The 23rd Edition of the 401k Averages Book is available for $95 and can be purchased by calling (888) 401-3089 or online atwww.401ksource.com.

A variety of free downloadable infographics comparing small plan 401(k) fees are also available. Infographic courtesy 401k Averages Book

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