New 401k Averages Book Finds Plan Fees Still Falling, Cost Disparities Persist

Brian Anderson

3 hours ago

More evidence that 401(k) fees are declining across all plan sizes comes from the new release of the 26th Edition of the 401k Averages Book.

Joseph W. Valletta, CFA, author of the 401k Averages Book, said most scenarios also show reductions in total plan costs and advisor compensation. The data also underscores a persistent reality: smaller plans continue to pay significantly more than their larger counterparts, and cost variation across providers remains substantial.

“Across all scenarios, we are seeing continued downward pressure on investment fees, with total plan costs declining in all but the smallest plan scenario,” Valletta said. “Advisor compensation was frequently flat, but more scenarios showed declines compared to prior years. At the same time, plan size and average account balance continue to be key drivers of cost, and meaningful disparities persist across plans.”

First published in 1995, the 401k Averages Book (www.401ksource.com) is the only independent benchmarking book focused exclusively on 401(k) plan cost data. With more than 25 years of consistent analysis, it is widely used by fiduciaries, advisors, and service providers to benchmark fees, support governance processes, and inform plan decision-making.

The 26th Edition features 24 plan scenarios covering plans with 10 to 2,000 participants. It also includes updated fee benchmarks for investment, recordkeeping, and advisor compensation; infographics illustrating fee trends and per-participant costs; and practical reference points for advisors, fiduciaries, and consultants.

Key data in 26th Edition

Investment Fees Continue to Decline Across All Scenarios
Investment-related costs decreased in every plan scenario analyzed, with fees declining between 0.03% and 0.06%, reflecting ongoing competition, increased use of lower-cost investment vehicles, including zero revenue-sharing funds, and broader adoption of institutional pricing structures.
Total Plan Costs and Advisor Compensation Trend Lower
In all but one scenario, the smallest plan, total plan costs declined. Advisor compensation was frequently flat, but more scenarios showed decreases compared to prior years, continuing the broader trend of fee compression.
Smaller Plans Continue to Pay More
Despite overall fee reductions, smaller plans consistently experience higher total costs and advisor fees compared to larger plans. For example, a $5 million plan averages 1.04% in total plan costs and 0.37% in advisor compensation, while a $50 million plan averages 0.72% and 0.16%, respectively, reinforcing the impact of scale on pricing.
Recordkeeping Fees Mixed in Small Plan Market
While many segments saw stability or declines, recordkeeping fees in smaller plans were flat to slightly higher in some scenarios, with average increases of approximately 0.03%, influenced in part by evolving 401k Averages Book’s data construction and continued shifts in service and pricing models.
Wide Cost Ranges Highlight Need for Benchmarking
The range of total plan costs remains significant across providers and plan designs. For example, a 50-participant plan with $500,000 in assets shows total plan costs ranging from 0.99% to 3.77%, highlighting the importance of regular benchmarking.

“Fiduciaries have a responsibility to understand and evaluate all components of plan fees, not just investment costs, but recordkeeping and advisor compensation as well. Benchmarking is one of the most effective tools available to support that process,” Valletta added. “With continued litigation risk in the retirement plan space, strong governance practices are more important than ever. Regular benchmarking of plan fees is a critical step in demonstrating prudent oversight and helping ensure participants are receiving competitive pricing.”

The 26th Edition is available for $95 at www.401ksource.com or by calling (888) 401-3089.