Study Reveals Wide Range of 401k Plan Fees

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Jan 17, 2012, 09:55 ET

BALTIMORE, Jan. 17, 2012 /PRNewswire/ -- The average total plan cost for a small retirement plan (100 participants) is 1.30%, while the average total plan cost for a large retirement plan (1,000 participants) is 1.08%, according to the 12th Edition of the 401k Averages Book.

The study shows the small plan average investment expense is 1.24%, while the large plan average investment expense is 1.05%.

Preparing for the Department of Labor's 408(b)(2) Disclosure Regulations
"With the DOL's fee disclosure effective date set for April 1, knowing if your 401k plan fees are reasonable will be very important," says Joseph Valletta, co-author of the 401k Averages Book.

The recent focus on investment expenses is well reasoned because the study finds investment expenses account for 95% of the small plan's total expenses and 98% of the large plan. "If an employer really wants to cut their 401(k) costs they need to examine their investment related expenses," says David Huntley, co-author of the 401k Averages Book.

Wide Range between Low and High Cost Providers
The range between the high and low total plan costs on a 100 participant plan with $50,000 average account balance is .36% to 1.71%. "With all the focus on fee disclosure and 408(b)(2) it's important employers and their advisors compare their fees to a benchmark and understand where they fit into the range of costs in the marketplace," says Huntley.

Revenue Sharing and Net Investment Costs
For the first time, the 12th Edition breaks down investment costs and identifies the revenue sharing and net investment amounts. The study finds the average revenue sharing amount on a small plan is .68%, while the net investment cost is .56%. "Fee disclosure is causing some plan sponsors and their advisors to take a more detailed look at how their investment costs are allocated," says Valletta.

About 401k Averages Book
Published since 1995, the 401k Averages Book is the only resource book available for non-biased, comparative 401k average cost information. It's designed to provide financial professionals and plan sponsors with essential 401k cost benchmarking information. The 12th Edition of the 401k Averages Book is available for $95. Advisors may purchase an annual individual Advisor License which allows them use the data in their client reports. The 401k Averages Book can be ordered by calling (888) 401-3089 extension 1 or online at www.401ksource.com.

Contact: Joseph W. Valletta, CFA

www.401ksource.com

Phone: (410) 296-1081 ext. 3

E-mail: [email protected]

SOURCE 401k Averages Book