Are All $5,000,000 401k Plan Fees the Same?

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Participant Account Balance Size Influences 401k Plan Fees

Your Source For 401k Fee Information.

"There can be significant cost differences if the $5,000,000 401k plan has 100 participants as opposed to 500 participants.”

According to a report published by the 401k Averages Book titled, Are All $5,000,000 401k Plans Created Equal?, the size of a 401k plan's average participant account balance will influence the amount of fees they pay.

Using fee data from the 401k Averages Book the report illustrates the difference between a plan with $5,000,000 in assets and $50,000 average account balance and that of a plan with $5,000,000 in plan assets and a $10,000 average account balance.

"401k fees for all $5,000,000 plans are not equal. There can be significant cost differences if the $5,000,000 401k plan has 100 participants as opposed to 500 participants," says Joseph W. Valletta, co-author of the 401k Averages Book. "That's why it's important to make apples to apples comparisons when benchmarking 401k fees." According to the report, the total bundled cost for a plan with 100 participants and an average account balance of $50,000 ($5,000,000 in assets) is 1.34% as compared to 1.54% for a 500 participant plan with an average account balance of $10,000 ($5,000,000 in assets).

Wide Range Between Low and High Cost Providers

The report, Are All $5,000,000 401k Plans Created Equal?, illustrates the very wide range that exists between the low and high cost providers. "If you're an advisor or plan sponsor and don't know what your 401k plan fees are, you are asking for trouble," says David W. Huntley, co-author of the 401k Averages Book. The range between the high and low total plan costs on a $5,000,000 plan, with $10,000 average account balances is 1.06% to 2.07%. "There is a wide range of costs for 401k services and it is important to understand where your plan fits in that range. Plus, with new 401k fee disclosure and fee transparency initiatives under way, knowing how your plan compares to an average is valuable information."

A detailed copy of the full report is available at http://www.401ksource.com/freespecialreport.aspx

About 401k Averages Book

Published since 1995, the 401k Averages Book is the only resource book available for non-biased, comparative 401k average cost information. It is designed to provide financial professionals and plan sponsors with essential 401k cost information needed to determine if their plan costs are above or below average. The Averages Book's easy to read format and 112 charts allows users to quickly identify the appropriate fee benchmark and compare investment, recordkeeping, trustee and total plan costs.

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Joseph Valletta
401k Averages Book
(410) 296-1081 ext. 3
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