Average 401k Fees by Plan Size Revealed

According to a recent study, average 401k fees can range from 0.09% to 1.35% of assets under management, depending on the plan size.

Small 401k plans with fewer than 100 participants tend to have higher fees, often exceeding 1.5% of assets under management.

Large 401k plans with 1,000 or more participants, on the other hand, tend to have lower fees, averaging around 0.5% of assets under management.

Smaller plans often have higher administrative costs, which can be a significant burden for plan sponsors.

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Average 401k fees can vary greatly depending on the size of the plan. For plans averaging $50 million in assets with around 1,000 participants, fees decreased from 0.90% in 2017 to 0.88% in 2021.

Smaller plans have also received a discount, with fees decreasing from 1.25% in 2017 to 1.19% in 2021 for plans with an average of $5 million in assets and 100 participants.

The largest plans have the lowest fees, ranging from 0.37% on average, while the smallest plans have the highest fees, averaging 1.42%.

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Here's a breakdown of average fees for different plan sizes:

Keep in mind that these fees can add up, and in some cases, they've been found to eat away at the benefits of a 401(k). A comprehensive 2015 academic study found that in 16% of 3,500 plans analyzed, fees were so high that they "consume the tax benefits of investing in a 401(k) for a young employee."

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401(k) fees have actually decreased overall for most plans since 2017, according to the National Association of Plan Advisors 2021 study. For plans averaging $50 million in assets with approximately 1,000 participants, fees decreased from 0.90% in 2017 to 0.88% in 2021.

Smaller plans have received a discount as well, with fees decreasing from 1.25% in 2017 to 1.19% in 2021 for plans with 100 participants or $5 million in assets.

The biggest factors in the cost of your 401(k) are the size of your company and the plan it uses, David Blanchett, head of retirement research for Morningstar's Investment Management group, tells CNBC Make It. The average total plan fees range from 0.37% for the largest plans to 1.42% for the smallest plans, his research found.

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For plans with $0-$500k in assets, the average fee is 0.69%, while for plans with $1M-$5M in assets, the average fee is 0.47%. This is based on a study by Employee Fiduciary, which partners with hundreds of 401(k) financial advisors nationwide.

You can ask your HR department or plan manager to add more index funds to your plan's investment options, which are typically low-cost and a reasonable request. Index funds often have lower fees than actively managed funds.

Here's a breakdown of the average fees charged by 1,109 401(k) financial advisors in a study by Employee Fiduciary:

Understanding the fees associated with your 401(k) plan is crucial to making the most of your retirement savings. The three primary fees associated with 401(k) plans are investment, administration, and individual services fees.

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Fees and costs can be a complex and confusing topic when it comes to 401(k) plans. The size of your company and the plan it uses are the biggest factors in determining the cost of your 401(k).

The average total plan fees range from 0.37% for the largest plans to 1.42% for the smallest plans. This can add up and in some cases, eat away at the benefits of a 401(k). A comprehensive 2015 academic study found that in 16% of 3,500 plans analyzed, fees were so high that they "consume the tax benefits of investing in a 401(k) for a young employee."

For plans averaging $50 million in assets with approximately 1,000 participants, the fees decreased from 0.90% in 2017 to 0.88% in 2021. Smaller plans have also received a discount, with fees decreasing from 1.25% in 2017 to 1.19% in 2021.

The administration fees charged by a 401(k) plan advisor can vary from as little as 0.05% to 2%. As with other 401(k) fees, the larger the assets and more participants, typically the smaller the administration fee.

Here's a breakdown of average fees for small, medium, and large plans:

These figures are based on a study of 1,109 401(k) financial advisors and are a good representation of the fees you can expect to pay for a 401(k) plan.

401k Fee Studies show that fees have been decreasing overall for most plans. Since 2017, 401(k) plan fees have actually decreased for plans averaging $50 million in assets with approximately 1,000 participants, from 0.90% in 2017 to 0.88% in 2021.

Smaller plans have also received a discount, with fees decreasing from 1.25% in 2017 to 1.19% in 2021 for plans with an average of 100 participants and $5 million in assets.

A study of 1,109 401(k) financial advisors found that the average fee for plans with $0-$500k in assets was 0.69%, while for plans with $1M-$5M in assets, the average fee was 0.47%.

The same study found that the median fee for plans with $0-$500k in assets was 0.65%, while for plans with $1M-$5M in assets, the median fee was 0.50%.

Here's a breakdown of the average fees for plans of different sizes:

In 2020, the average total plan cost for a small retirement plan amounted to a 1.24% fee for participants, while for large retirement plans, the average fee paid by participants came out to 0.93%.

401(k) fees can be broken down into three primary categories: investment fees, administration fees, and individual services fees.

Investment fees are charged for the management of investment options within the 401(k) plan. These fees can range from 0.05% to 2% of the plan's assets, with larger plans typically having lower fees.

Administration fees cover the cost of running the 401(k) plan, including tasks such as record-keeping and compliance. According to a study by the National Association of Plan Advisors, administration fees decreased from 0.90% in 2017 to 0.88% in 2021 for plans averaging $50 million in assets with approximately 1,000 participants.

Individual services fees are charged for services such as financial planning and investment advice. A study by Employee Fiduciary found that the average fee charged by 1,109 financial advisors was 0.69% for plans with assets ranging from $0 to $500,000.

Here's a breakdown of the average fees charged by financial advisors in different plan size categories:

These fees can add up, and it's essential to understand what you're paying for. According to a study by PLANSPONSOR, in 2020, the average total plan cost for a small retirement plan amounted to a 1.24% fee for participants.