For both small and large retirement plans, average total plan costs for 401(k)s continued to decline in 2021, with plan investment fees leading the way, according to the latest edition of the 401k Averages Book.
The 22nd edition of the book shows that all scenarios saw a year-over-year decrease in total investment costs ranging between 0.01%–0.06% from the previous year, with the average representing a decrease of 0.03%.
Not surprisingly, smaller plans are still paying slightly more in fees than larger plans. According to the data, the smallest plans with $5 million in assets costs 1.19%, while the average cost for plans with $50 million in assets is 0.88%.
The data is through Sept. 30, 2021. Among the key findings in the new edition:
- Large 401(k) plan fees: Fees for plans with an average range of 1,000 participants and $50 million in assets declined from 0.90% to 0.88% in 2021 and are down from 0.95% in 2017.
- Small 401(k) plan fees: Fees for plans with an average range of 100 participants and $5 million in assets declined from 1.20% to 1.19%. Since 2017, small plan total costs have dropped 0.06%, down from 1.25%.
- Plans with smaller average account balances pay more than those with larger balances: A $20 million plan with 2,000 participants has an average total plan cost of 1.19%, while a $20 million 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 million in assets and 100 participants ($10,000 average account balance) is 0.72% to 2.69%.
“For years there has been an increased awareness around the impact 401(k) fees have on long-term savings. The trend in lower fees shows that employers and their advisors have been working to reduce the drag caused by these fees,” Joseph Valletta, author of the 401k Averages Book, said in a statement.
Published since 1995, the 22nd edition of the 401k Averages Book is available for $95 and can be purchased by calling 888-401-3089 or online at www.401ksource.com.
