Wide Range in 401k Total Plan Costs

BALTIMORE, April 18, 2011 /PRNewswire/ -- Total plan costs for running a 401k can vary widely, but for most employers the range between high and low total plan costs is moderate. For a 401k plan with approximately $2,000,000 in assets the range between the high and low cost providers averages around 1.33%, while the range for the middle 50% of the universe is .31%.

"Our data shows that, yes, the range between high and low costs can be significant, but most 401k plan costs are going to be grouped around the median," said David W. Huntley, co-publisher of the 401k Averages Book.

According to the 401k Averages Book report the range between the high and low cost for a 50 participant plan with $2,500,000 in assets is 1.24%, while the range for the middle 50% of the universe is .29%. The median total plan cost for this plan size is 1.49%.

Significant Reduction in the Range between the Middle 50% of the Universe

Although similar trends can be observed across all plan sizes, the disparity between high and low costs is largest for plans with smaller plan assets and more participants. "Even though the range between high and low total plan costs might be greater for these types of plans, we do see a significant reduction in the range between the middle 50% of the universe," said Huntley. The 401k Averages Book study shows the range of total plan costs for a plan with 200 participants and $2,000,000 is 1.48%, while the range for the middle 50% of the universe is .32%. The median total plan cost for this plan size is 1.70%.

Huntley said "With all the focus on fee disclosure and 408(b)(2) it's important employers and their advisers compare their fees to a benchmark and understand where they fit into the range of costs in the marketplace."

About the 401k Averages Book

Published since 1995, the 401k Averages Book (www.401ksource.com) 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 information needed to determine if their 401k plan costs are above or below average. The 11th Edition of the 401k Averages Book is available for $95. The 401k Averages Book can be ordered by calling (888) 401-3089 extension 1 or at www.401ksource.com.

CONTACT: Joseph W. Valletta, 410-296-1081 ext 3, [email protected]

SOURCE 401k Averages Book