Milliman 401k Fees: What You Need to Know

Milliman 401k fees can be a significant burden on your retirement savings. According to Milliman's own data, the average 401k plan has fees that eat away at 1.3% to 1.4% of your assets annually.

You may not even realize these fees are being deducted from your account, but they can add up over time. In fact, a 1.3% annual fee may seem small, but it can cost you around $13,000 over a 30-year period.

Milliman's research also shows that higher fees are often associated with plans that have a larger number of investment options. This can make it difficult for plan administrators to navigate and select the most cost-effective options for their participants.

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Milliman 401(k) fees can be a significant burden on your retirement savings. According to the article, Milliman's administrative fee ranges from 0.035% to 0.075% of plan assets.

The average annual cost of Milliman's administrative fee can be substantial, ranging from $1,500 to $3,750 per year for a $5 million plan.

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As the plan size increases, the administrative fee decreases, but the average annual cost still adds up. For example, a $10 million plan would pay around $1,250 to $2,875 per year in administrative fees.

Keep in mind that these costs are in addition to any other fees associated with the plan, such as investment management fees and recordkeeping fees.

Revenue sharing and investment fees can be a complex and hidden cost for 401(k) plan participants. A better share class may mean one with a lower expense ratio on the investment.

Revenue sharing is often determined by the size of a plan's assets, with larger plans qualifying for better share classes. These better share classes can have lower expense ratios and less revenue sharing paid.

But just because a company or organization qualifies for a better share class, it doesn't guarantee that their plan will include it.

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Revenue sharing is a complex issue in bundled plans, and it's essential to understand how it works. Sponsors and participants in these plans face challenging questions, such as where revenue sharing is paid and how much is paid.

A mutual fund share class doesn't describe the quality of the fund, but rather what's paid for the fund. There are different share classes, and plans with significant assets can qualify for a better share class with a lower expense ratio.

Plans that qualify for a better share class may not always include it, and the additional revenue is often used to compensate advisors, brokers, and/or plan administrators. This can be a significant cost to retirement savings.

Plan sponsors and participants should know what share class their plan qualifies for, as these additional costs can erode retirement savings over time.

Broaden your view: What Does 401 K Plan Generally Provide Its Participants

Modern 401(k) plans have become increasingly complex, with 38 definitions for fee terms listed on the Department of Labor 401(k) Fee Disclosure Form.

Bundled plans were originally supposed to simplify 401(k) management, but they've become complicated as fee calculation methods have evolved. Certain plan-related expenses can be charged directly to plan participants, including distribution and hardship withdrawal fees, loan processing fees, and administrative fees for terminated participants.

There are four parties that deliver services to 401(k) plans: recordkeepers, trustees, fund companies, and investment advisors. With today's technology and integrated platforms, all of these services can be overseen by a single, unbiased point of contact.

The bundled-unbundled approach uses an open architecture to integrate competitive pricing practice and industry-leading financial service options. This approach brings together unbundled service providers in an integrated electronic platform, resembling a bundled approach.

Here are some examples of fees allowed by ERISA:

And here are some examples of fees that can be charged directly to plan participants:

Evaluating and comparing the fees associated with a Milliman 401(k) plan is crucial to making informed decisions about your retirement savings. Milliman's 401(k) plans often have administrative fees ranging from 0.05% to 0.10% of total plan assets, which can add up over time.

To put this into perspective, a $100,000 plan with a 0.05% administrative fee would cost $50 per year. This may not seem like a lot, but it can add up quickly.

The average cost of a Milliman 401(k) plan is around $1,400 per year, which is significantly lower than some other providers. However, this cost can vary depending on the specific plan features and services chosen.

It's essential to consider the total cost of the plan, including any additional fees for services like record-keeping, investment management, and plan administration.

The scrutiny is just beginning for 401(k) plans like Milliman's. The Government Accountability Office (GAO) recently released a 43-page report arguing for disclosure of fees by both plan sponsors and plan providers.

Plan sponsors can request an unbiased audit of their existing plans to identify areas for improvement. This can help ensure ERISA compliance and make sure 401(k) plans benefit the people they were designed to serve.

The GAO wants Congress to amend ERISA so that plan sponsors are required to disclose all fees, including investment management fees, to participants. This information would also be reported to the DOL.

Milliman's 401(k) plan has been accused of failing to remove poorly performing investments, subadvised by its affiliate, from the plan. This led to significant losses for participants.

A participant in Milliman's 401(k) plan has filed an ERISA fiduciary breach lawsuit against the company, its board of directors and members of its 401(k) investment and administrative committees. The lawsuit alleges that the defendants failed to prudently monitor the plan's investments and remove poorly performing investment options.

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