401(k) Fee Trends Follow Familiar Path

A new report says that 401(k) total plan costs declined for most size plans last year, though there was a wide range between high- and low-cost providers, particularly within the small plan segment.

According to the new (18th) edition of the 401k Averages Book, scenarios with 200 or more participants saw a decrease in total plan costs from last year, while investment fees continued to decline. Scenarios with 200 or more participants saw a year-over-year decrease in total investment costs of between 0.01%-0.03%.

There was, however, a wide range between high- and low-cost providers, particularly among smaller plans. According to the report, the range of a plan with $1 million in assets and 100 participants ($10,000 average account balance) is 0.72% to 2.80%.

Those trends mirrored those from the prior edition, which also found that while 401(k) fees were declining, there was a wide range in results, particularly among smaller plans.

The latest edition of the reference has been expanded to include 401(k) fee information on plans with large participant account balances. Prior editions showed data for plans with $10,000 and $50,000 average account balances. With the addition of the $100,000 balance information, financial professionals can choose from three sections of benchmarks. Each section is made up of eight different plan size scenarios.

Data from the 401k Averages Book shows plans with higher average account balances pay lower total fees. The total cost for a plan with $1 million in assets and 10 participants ($100,000 average account balance) is 1.47%, while a $1 million plan with 100 participants ($10,000 average account balance) is 1.89%.

The 401k Averages Book, 18th edition, is available for $95 and can be purchased by calling (888) 401-3089 or at www.401ksource.com.

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