401k Averages Book finds 401(k) Plan Fees Continue to Decline

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Investment Fees Lead the Decline of Total Plan Costs

“Even as 401(k) fees continue to decline the industry saw new fee litigation cases explode in 2020. This may be why many studies are showing a majority of employers are looking to review/benchmark their plan fees in 2021),” said Joseph W. Valletta author of the 401k Averages Book.

The new release of the 401k Averages Book 21st Edition shows the average total plan cost for a small retirement plan (100 participants/$5,000,000 assets) declined from 1.23% to 1.20% over the past year, while the average total plan cost for a large retirement plan (1,000 participants/$50,000,000 assets) declined from 0.91% to 0.90%.

“Even as 401(k) fees continue to decline the industry saw new fee litigation cases explode in 2020. This may be why many studies are showing a majority of employers are looking to review/benchmark their plan fees in 2021, while others are considering vehicles such as Pooled Employer Plans (PEPs),” said Joseph W. Valletta author of the 401k Averages Book. “Fee benchmarking is an important piece of the 401k governance process and the Averages Book is designed to help employers and their advisors with this step.”

Key Findings:

  • Investment fees continue to decline: All scenarios saw a year over year decrease in total investment costs ranging between 0.02%-0.04%, 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 1.20%, while the plan with $50,000,000 in assets is 0.90%.
  • 401(k) total plan costs declined for most size plans: 23 of 24 scenarios saw a decrease in total plan costs from last year, while the other one remained unchanged.
  • 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 0.68% to 2.73%.

Infographics Included in the Book:
The 401k Averages Book includes three easy to read infographics illustrating small plan costs. Each infographic shows the 5-year trend of total plan costs, range of per participant costs and other key data points.

About 401k Averages Book
Published since 1995, the 401k Averages Book (http://www.401ksource.com) is the only resource book available for non-biased, comparative 401(k) average cost information. It's 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 21st Edition of the 401k Averages Book is available for $95 and can be purchased by calling (888) 401-3089 or online at http://www.401ksource.com.

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Joseph W. Valletta
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