Retirement Plans - New Report Reveals Ways To Cut 401(k) Costs

The 11th Edition of The 401K Averages Book reports that the average charge for a small retirement scheme of 100 subscribers is 1.33% compared to a charge of 1.11% in a scheme of 1000 subscribers. Also, small plan investment expenses are estimated at 1.26% as compared to 1.09% of a large plan’s investment expense.

The book also reveals that investment expenses make up 95% of of any small plan total expenses charged and 98% of any 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.

The expense range is significant on a plan of 100 subscribers each with an average $50,000 account balance falling between .57% and 1.76%.

“There’s a wide range of costs for 401k services and it’s important to understand where your plan fits in that range. With new 401k fee disclosure and fee transparency initiatives under way, knowing how your 401k plan fees compare to an average is valuable information,” says Joseph Valletta, co-author of the 401k Averages Book.

First published in 1995, the 401k Averages Book offers independent expense information on 401k plans. Its purpose is to offer investment managers crucial information so they can decide if their plans’ costs are above or below average.

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