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What are average 401k plan expenses for a plan with assets of 1.7 million? Is my current plan charging me too much?

Jul 03, 2014 by charles from Ocean Springs, MS in  |  Flag
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3 votes

When you are talking about 'plan expenses', they can broadly fall into three arenas. Plan administration fees, investment fees, and individual fees. Is it possible to be more specific on which plan expenses you are talking about in the question? I agree with the other advisors that you should contact the plan administrator/custodian to find out the specifics of your plan, but on a smaller plan at 1.7 million you should be most conscious of seeing what the sales charges/loads are if the plan is set up that way or the overall advisory/management fees which in my opinion shouldn't be much more than 1% including all costs for the advisor and the fund expenses.

Comment   |  Flag   |  Jul 06, 2014 from Alpharetta, GA

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1 vote

Call the plan administrator on your statement for specifics.

Comment   |  Flag   |  Jul 03, 2014

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Rich Winer Level 20

Charles, As my colleagues have advised, you should be able to get a fee breakdown from your plan sponsor or provider.

That said, unless your employer wishes to change their plan provider, you are stuck with the plan and investment options they offer. I would suggest focusing your attention on selecting the best performing and most appropriate investments for your goals, risk tolerance and investment time horizon. I would be most concerned with each fund's net returns, how they compare with their peers and how much risk they've taken to achieve their returns. If you don't feel qualified to do that, you may want to pay a local financial advisor to evaluate your investment options and help you develop and effective allocation.

I think maximizing your net investment returns with the available investments in your plan is a far better use of your time than worrying about plan fees that you can't do anything about.

Comment   |  Flag   |  Jul 04, 2014 from Woodland Hills, CA

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Charles,

I would request a breakdown of the all fees paid from your provider. There are a lot of different fees that 401(k) providers and sponsors could charge, so make sure they list everything (fund fees, annual admin fees...). There are a lot of great options for smaller 401(k) plans (under $10mm), especially since many providers, such as Vanguard and Fidelity, are now actually trying to help those size plans. Vanguard specifically has a great option which makes the advisor go on as a co-fiduciary to your plan, which helps give you another layer of protection on the advice you are receiving. I hope this helps, Nick

Comment   |  Flag   |  Jul 08, 2014 from King of Prussia, PA

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That's a great question, Charles.

A study by Deloitte (dated November 2011, conducted for the Investment Company Institute) shows the median "all-in" fee at 1.14% for plans with assets between $1 million and $10 million. As one might guess, as the asset levels increase, the average fees go down. Over the recent years, I believe fees have been coming down, but there's no reason why it cannot go lower.

Comment   |  Flag   |  Jul 08, 2014 from Newport Beach, CA

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A lot depends on the Plan Custodian / Administrator. Call the contact number on your Plan Statement and ask for a breakdown of fees and what your personal account is being charged on a monthly/quarterly/annual basis.

Comment   |  Flag   |  Jul 03, 2014 from Canton, GA

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