Plan Size Influences 401k Plan Fees
BALTIMORE, MD, December 6, 2010 -- The average total plan cost for a small retirement plan (100 participants) is 1.33%, while the average total plan cost for a large retirement plan (1,000 participants) is 1.11%, according to the 11th Edition of the 401k Averages Book.
The study shows the small plan average investment expense is 1.26%, while the large plan average investment expense is 1.09%.
Investment Expenses Account For Majority of Total Plan Fees
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 401k 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 a $50,000 average account balance is .57% to 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.
For the first time the 11th Edition provides sixteen quartile charts to help plan sponsors and their advisors see whether their costs fit in the first, second, third or fourth quartile. The range between the 25th percentile and 75th percentile for the small plan universe is 1.18% to 1.49%. "If you're monitoring plan fees, it will help to understand the difference of being in the first or fourth quartile," says Huntley.
About 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 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. Advisors may purchase an annual individual Advisor License which allows them to 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.
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