How much does your employer 401k plan charge?

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Topic Author
TheEleven
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How much does your employer 401k plan charge?

Post by TheEleven » Mon Aug 19, 2019 7:50 pm

I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?

smitcat
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Re: How much does your employer 401k plan charge?

Post by smitcat » Mon Aug 19, 2019 8:18 pm

We have a small company with a handful of staff in our 401K plan.
We pay all the administration fees for each staff member - the individual fund fees the staff pay are generally inline with typical Vanguard and Fidelity fees (low).

dcop
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Re: How much does your employer 401k plan charge?

Post by dcop » Mon Aug 19, 2019 8:56 pm

I retired in May 2018 but I worked for 5Bil company. Vanguard was the custodian and the employer negotiated to offer Admiral class regardless of minimums. The employer charged each participant ten dollars a quarter to cover the companies admin expenses.

mariezzz
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Re: How much does your employer 401k plan charge?

Post by mariezzz » Mon Aug 19, 2019 10:10 pm

TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
1.1% of what? Your balance in the plan?
From what I understand, admin fees per person are higher when the number of employees is small - but others will be able to provide more detail.

dockidny
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Re: How much does your employer 401k plan charge?

Post by dockidny » Mon Aug 19, 2019 10:29 pm

I am a small business part-owner and our plan is also high fee, in my opinion. We changed to American Funds a few years ago to have a unified retirement plan "package" in order to be in compliance with regulations and to meet our fiduciary obligation to our employees (which as I understand it, means that, as owners, we have to provide reasonable investment options as well as investment advice to our employees to meet obligations under ERISA). We have about 9 participants in the plan, which is a hybrid 401k/profit sharing plan -- 4 partners who are considered "highly compensated" and 5 employees who are not.

We have a financial advisor who meets with us quarterly, reviews the performance & expense ratios of the available funds in our plan, and gives general advice. She has offered to meet with us individually, so I have met with her annually (twice now), but her advice has basically been "you're doing great! keep it in the Target Date Retirement Fund!"

Our fund options are generally good with low expense ratios (some very low-cost Vanguard and Fidelity index funds, American Funds Target Date funds with ERs of 0.3-0.4%, and some other managed options that cost a bit more). However, for this advice, each account is charged a 1% fee of assets under management. As my balance grows, these advisory fees feel like they are getting costly. I am actually considering requesting an in-service rollover (while still employed and contributing) to my IRA account. Anyone with advice on this? It is still confusing as to whether I need to be 59 1/2 to do this (I'm not, I'm 47).

bada bing
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Re: How much does your employer 401k plan charge?

Post by bada bing » Mon Aug 19, 2019 10:39 pm

I work for a mega-corp (50K employees world wide). 401K has zero administrative fees. All the investment options are indexed investment trusts (not mutual funds) and have ERs between .005% and .02%. A sparse but adequate list of investment options. Fidelity is the plan administrator.

I also have a solo 401K at Schwab. Zero administrative fees. Full brokerage investment options with typical individual investor commission schedule including free mutual fund and ETF list.

1.1% annual administrative fee seems like robbery to me.

dave_k
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Re: How much does your employer 401k plan charge?

Post by dave_k » Mon Aug 19, 2019 10:42 pm

smitcat wrote:
Mon Aug 19, 2019 8:18 pm
We have a small company with a handful of staff in our 401K plan.
We pay all the administration fees for each staff member - the individual fund fees the staff pay are generally inline with typical Vanguard and Fidelity fees (low).
+1 - We used to be in the same position as the OP, but a few years ago we decided to do this. Definitely worth it. We have 10 or fewer people participating, and between 1 and 2 million in total in the plan.

HomeStretch
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Re: How much does your employer 401k plan charge?

Post by HomeStretch » Mon Aug 19, 2019 10:47 pm

The admin fee charged for a smaller company’s 401k plan depends on the provider, # participants and plan asset $. Some employers pay the fee, otherwise it’s charged to the participants.

I think 1.1% is not uncommon but it’s high. Hopefully you have some available funds with low ERs. Try lobbying for a better 401k plan with lower fees, if available to your company.

Spouse’s 35-employee Plan adds a 0.5% admin fee on top of fund ERs, but luckily there are a few low ER choices and a company match.
Last edited by HomeStretch on Mon Aug 19, 2019 11:01 pm, edited 2 times in total.

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Blackwood
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Re: How much does your employer 401k plan charge?

Post by Blackwood » Mon Aug 19, 2019 10:49 pm

Until I retired a few years ago I worked for a mid-sized company that covered all 401(k) fees (not counting the mutual fund's expense ration of course) and matched the first 6% of my salary that I contributed.

The funds were a mixed bag with some low cost index funds as well as some fairly high cost managed funds. I was able to create what I thought was a reasonable portfolio using just the low cost index funds (supplemented by a separate IRA).

I'm not trying to boast, this is just a data point to show that not all 401(k)s suffer from high fees.
Last edited by Blackwood on Mon Aug 19, 2019 10:54 pm, edited 1 time in total.

EddyB
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Re: How much does your employer 401k plan charge?

Post by EddyB » Mon Aug 19, 2019 10:51 pm

dcop wrote:
Mon Aug 19, 2019 8:56 pm
I retired in May 2018 but I worked for 5Bil company. Vanguard was the custodian and the employer negotiated to offer Admiral class regardless of minimums. The employer charged each participant ten dollars a quarter to cover the companies admin expenses.
$12.50 per quarter at mine, and a different administrator, but otherwise basically the same idea.

JasonA1987
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Re: How much does your employer 401k plan charge?

Post by JasonA1987 » Mon Aug 19, 2019 10:54 pm

My employer has about 100 employees. We pay 0.25% of the plan balance until $175,000. We have some vanguard options with ERs of 0.03-0.04 and a 6% match.

Topic Author
TheEleven
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Re: How much does your employer 401k plan charge?

Post by TheEleven » Mon Aug 19, 2019 10:58 pm

mariezzz wrote:
Mon Aug 19, 2019 10:10 pm
TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
1.1% of what? Your balance in the plan?
From what I understand, admin fees per person are higher when the number of employees is small - but others will be able to provide more detail.
Apparently the plan fee is just stacked on top of each fund's ER. The plan fees are per fund as spelled out in the disclosure, however since the plan fee is 1.1% of every fund, it just works out to 1.1% of your entire portfolio. For instance I put some of my contribution in a Fidelity 500 index at 0.10% expense ratio. Then the plan puts its 1.1% on top of that, so I'm paying 1.2% on the balance of that fund. And so on for any other fund available - just take it's expense ratio and add 1.1%. So I'm paying 1.2% for a Fidelity S&P 500 index fund! Seems exorbitant, but I don't know if that's normal for very small company 401k plans.

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ram
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Re: How much does your employer 401k plan charge?

Post by ram » Mon Aug 19, 2019 11:04 pm

5000+ employees.
Fidelity.
$38/year.
Availability of Total (US) Market and Total bonds at <5 basis points.
Ram

dcop
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Re: How much does your employer 401k plan charge?

Post by dcop » Mon Aug 19, 2019 11:06 pm

TheEleven wrote:
Mon Aug 19, 2019 10:58 pm

Apparently the plan fee is just stacked on top of each fund's ER. The plan fees are per fund as spelled out in the disclosure, however since the plan fee is 1.1% of every fund, it just works out to 1.1% of your entire portfolio. For instance I put some of my contribution in a Fidelity 500 index at 0.10% expense ratio. Then the plan puts its 1.1% on top of that, so I'm paying 1.2% on the balance of that fund. And so on for any other fund available - just take it's expense ratio and add 1.1%. So I'm paying 1.2% for a Fidelity S&P 500 index fund! Seems exorbitant, but I don't know if that's normal for very small company 401k plans.
Man that 1.1% is a killer.

HawkeyePierce
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Re: How much does your employer 401k plan charge?

Post by HawkeyePierce » Mon Aug 19, 2019 11:55 pm

I don't know how common a fee like that is at small companies but it's certainly not necessary.

Employee Fiduciary charges $1500 + 0.08% for up to 30 participants.

Ubiquity offers flat-fee pricing for small company 401k plans.

https://www.bogleheads.org/wiki/How_to_ ... 01(k)_plan

One of my previous employers—a tiny startup that was just me and the two cofounders when we started our 401k plan—used Ubiquity and it was fine. Their fund offerings are perfectly reasonable.

ishkadetto
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Re: How much does your employer 401k plan charge?

Post by ishkadetto » Tue Aug 20, 2019 12:13 am

TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
My spouse's plan charges 1.04% admin fee blanketing. They had about 60 employees in the plan last year. John Hancock is the administrator.

The language is: "Your plan has engaged John Hancock to provide record-keeping services such as educational resources, transaction processing, investment platform, quarterly statements and website tools. Charges will be applied to your account as follows: 0.49%* on a pro-rata basis.
* Charges may fluctuate based on the total assets in the plan, according to a pre-set fee schedule and other conditions agreed to by your plan sponsor and John Hancock. The ongoing administration and management of your plan requires additional services such as fund selection and monitoring, consulting, plan compliance, plan reporting, and other administrative services. Charges will be applied to your account as follows: 0.55% on a pro-rata basis ***."

lakpr
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Re: How much does your employer 401k plan charge?

Post by lakpr » Tue Aug 20, 2019 1:46 am

Not a small employer; a MegaCorp with 63k employees over 3 continents.

$15 per quarter per participant
$50 upfront fee per year (meaning it is not levied quarterly, it is charged on each anniversary) if you want to use Self Directed Brokerage Option. This is over and above the previous fee

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meowcat
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Re: How much does your employer 401k plan charge?

Post by meowcat » Tue Aug 20, 2019 4:56 am

Mid size company, about 1,100 employees. 15 mil in plan assets. Our administrator is John Hancock. I pay 60 basis points just to be in the plan. That's on top of the funds' expense ratio, about 4 basis points for S&P500 index. Add $25/quarter for admin. These are just the costs that I know of. Good luck with John Hancock trying to find reality.

My Wife's plan is megacorp, thousands of employees. Administrator is TRowe Price. No admin, about 4 basis points, great matching plan.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

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dogagility
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Re: How much does your employer 401k plan charge?

Post by dogagility » Tue Aug 20, 2019 5:26 am

20K+ employees
$125 yearly admin fee
index funds expense ratios <0.1%
merrill/BoA :|
Taking "risk" since 1995.

JWooden10
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Re: How much does your employer 401k plan charge?

Post by JWooden10 » Tue Aug 20, 2019 5:49 am

We're a relatively small company (50-100 employee range) but belong to an industry association which allows for increased purchasing power of approximately 80,000-100,000 plan participants. Our fees our less than 0.2% and fund options are excellent. If applicable, could be something to bring up to your employer because they would likely significantly save on plan administration costs.

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Tamarind
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Re: How much does your employer 401k plan charge?

Post by Tamarind » Tue Aug 20, 2019 5:55 am

Yep, it's high and means the company is likely passing along all of the fee to the employee.

My company is small (<50 highly people with an average salary over $100k). I don't know what the balance in the plan is, but it's new, only offered for about 2 years. I pay 0.4% record keeping fee, equal to the 700+ person company I worked for before, and there are good, low ER fund options. I don't know how much of the cost the employer is covering.

JediMisty
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Re: How much does your employer 401k plan charge?

Post by JediMisty » Tue Aug 20, 2019 6:05 am

dcop wrote:
Mon Aug 19, 2019 8:56 pm
I retired in May 2018 but I worked for 5Bil company. Vanguard was the custodian and the employer negotiated to offer Admiral class regardless of minimums. The employer charged each participant ten dollars a quarter to cover the companies admin expenses.
This, except the funds are institutional ones with ERs even lower than ADMIRAL. Fees were lowered from $40 in 2018 to $38. Vanguard the custodian.

CnC
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Re: How much does your employer 401k plan charge?

Post by CnC » Tue Aug 20, 2019 8:02 am

TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
I have a 457 for a small municipality.

Our lowest sp 500 index fee is .95% so assume . 8% or so.

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Wiggums
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Re: How much does your employer 401k plan charge?

Post by Wiggums » Tue Aug 20, 2019 8:18 am

I retired last year, but we only had an annual fee of $75. The ERs through Vanguard were low. Non vanguard funds had a higher ER. but nothing crazy.

atdharris
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Re: How much does your employer 401k plan charge?

Post by atdharris » Tue Aug 20, 2019 10:13 am

As far as I know, my plan does not charge a fee. I work at a large law firm. Our plan is through Fidelity. No one has ever mentioned an admin fee, nor have I seen any charged to me.

casun
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Re: How much does your employer 401k plan charge?

Post by casun » Tue Aug 20, 2019 10:36 am

we are in the process of switching to vanguard. 56 participants with roughly $2.1 million. the admin/record keeping fees will be .31% which the company will cover. participants will pay fund ers only.

ERISA Stone
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Re: How much does your employer 401k plan charge?

Post by ERISA Stone » Tue Aug 20, 2019 12:54 pm

HawkeyePierce wrote:
Mon Aug 19, 2019 11:55 pm

One of my previous employers—a tiny startup that was just me and the two cofounders when we started our 401k plan—used Ubiquity and it was fine. Their fund offerings are perfectly reasonable.
I would recommend doing a search on Ubiquity on this site.

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blackfish
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Re: How much does your employer 401k plan charge?

Post by blackfish » Tue Aug 20, 2019 2:51 pm

$8.75 Quarterly [$35/year]

Vanguard Institutional Plus Shares offered [Changing to Institutional Trust Shares in September]

JeffAL
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Re: How much does your employer 401k plan charge?

Post by JeffAL » Tue Aug 20, 2019 4:48 pm

~250 person company, .43% plan fee, low cost index funds available.

HawkeyePierce
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Re: How much does your employer 401k plan charge?

Post by HawkeyePierce » Tue Aug 20, 2019 6:11 pm

ERISA Stone wrote:
Tue Aug 20, 2019 12:54 pm
HawkeyePierce wrote:
Mon Aug 19, 2019 11:55 pm

One of my previous employers—a tiny startup that was just me and the two cofounders when we started our 401k plan—used Ubiquity and it was fine. Their fund offerings are perfectly reasonable.
I would recommend doing a search on Ubiquity on this site.
Yikes. I left the company that was using them in 2015 so I didn't go through that episode.

limeyx
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Re: How much does your employer 401k plan charge?

Post by limeyx » Tue Aug 20, 2019 6:38 pm

TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
Small company here and we get charged 0.75%
And added to that, a very small (~1%) company match :(

anon_investor
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Re: How much does your employer 401k plan charge?

Post by anon_investor » Tue Aug 20, 2019 7:13 pm

Mega corp 401k with flat fee of about $30 annually, but we have several very low cost funds that I use with 0.01% expense ratios. The plan has a pretty generous match and also allows for mega backdoor Roth, which is great.

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2pedals
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Re: How much does your employer 401k plan charge?

Post by 2pedals » Tue Aug 20, 2019 7:15 pm

Retired from Mega Corp. No fees except for excessive-trading rules and/or fees. Limited selection of life cycle funds, active management, index funds and company stock. ER's anywhere between 0.70% (active management) and 0.03% (index).

index2max
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Re: How much does your employer 401k plan charge?

Post by index2max » Tue Aug 20, 2019 9:15 pm

TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
I work for a small publicly traded company with a market cap of about $1 billion that uses Principal as our 401(k) administrator.

Our fund options are pretty decent with mostly passive index funds (see my post history to see all fund options as of several months ago).

The annual administrative fee charged to all participants is $73, broken up into 12 monthly payments. I believe it is paid out from our biweekly paychecks rather than selling off our investments.

I couldn't find the fee-disclosure update form for 2019, but I believe it's now actually decreased to $70/year.

You having to pay a percentage fee of 1.1% from his account balance is robbery considering I've read plenty of other Bogleheads say their 401(k) plans only charge flat administrative fees. I don't know how tiny your company is, but if it really is so small that they can't bring down fees, I believe the Secure ACT being proposed by congress in 2019 will allow companies to band together to offer combined 401(k) plans.

Don't know if that is already possible already for smaller companies to merge their retirement plans together to cut down costs.

Topic Author
TheEleven
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Re: How much does your employer 401k plan charge?

Post by TheEleven » Tue Aug 20, 2019 11:35 pm

index2max wrote:
Tue Aug 20, 2019 9:15 pm
TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
I work for a small publicly traded company with a market cap of about $1 billion that uses Principal as our 401(k) administrator.

Our fund options are pretty decent with mostly passive index funds (see my post history to see all fund options as of several months ago).

The annual administrative fee charged to all participants is $73, broken up into 12 monthly payments. I believe it is paid out from our biweekly paychecks rather than selling off our investments.

I couldn't find the fee-disclosure update form for 2019, but I believe it's now actually decreased to $70/year.

You having to pay a percentage fee of 1.1% from his account balance is robbery considering I've read plenty of other Bogleheads say their 401(k) plans only charge flat administrative fees. I don't know how tiny your company is, but if it really is so small that they can't bring down fees, I believe the Secure ACT being proposed by congress in 2019 will allow companies to band together to offer combined 401(k) plans.

Don't know if that is already possible already for smaller companies to merge their retirement plans together to cut down costs.
OP here. My company is about as tiny as they come. We are a non-profit with probably 8-10 full time employees who qualify to participate in the 401k plan, and another 6 or so part timers who don't. That's why I was hoping to find out if the high fees were do to the small size of the company. Like maybe big companies have less expensive plans due to economy of scale or something. That 1.1% we pay is hard to swallow.
One of our fund offerings is a "guaranteed" fund that usually pays about 3.5%, guaranteed, which would be a pretty nice place for part of one's bond-type allocation, but that fee knocks it down to 2.5%, so that is a real example of how that plan fee hurts.

Sfog
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Re: How much does your employer 401k plan charge?

Post by Sfog » Wed Aug 21, 2019 1:02 am

Recently retired but was on the retirement committee of a professional company of 600 employees of who about 100 were highly compensated for 10 to 12 years. The retirement plan a 401k had about 60 million dollars. The retirement funds are invested in mutual funds chosen by the retirement committee with the assistance of 2 fiduciary advisors. Options provided were index funds black rock, DFA funds, vanguard target date funds, stable value funds. The er ratios were competitive as low as 4 basis points for one of the black rock index funds. The 401k requires an administrative group. The administrative group provides record keeping. It provides education and makes investment advice available to the employees. We periodically put this job up for bid. Overtime, the cost of administration fell from 34 basis points to 14 basis points of the assets. Each employee paid the fee on his total account. Multiple companies bid to offer this service including Vanguard, Schwab and Fidelity. Any participant of the plan could request to be on the committee.

McDougal
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Re: How much does your employer 401k plan charge?

Post by McDougal » Wed Aug 21, 2019 5:57 am

Dumb question. I guess I should call Fidelity, and I will, but are any administration or other fees beyond ER located on monthly/periodic statements?

index2max
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Re: How much does your employer 401k plan charge?

Post by index2max » Wed Aug 21, 2019 7:00 am

TheEleven wrote:
Tue Aug 20, 2019 11:35 pm
index2max wrote:
Tue Aug 20, 2019 9:15 pm
TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
I work for a small publicly traded company with a market cap of about $1 billion that uses Principal as our 401(k) administrator.

Our fund options are pretty decent with mostly passive index funds (see my post history to see all fund options as of several months ago).

The annual administrative fee charged to all participants is $73, broken up into 12 monthly payments. I believe it is paid out from our biweekly paychecks rather than selling off our investments.

I couldn't find the fee-disclosure update form for 2019, but I believe it's now actually decreased to $70/year.

You having to pay a percentage fee of 1.1% from his account balance is robbery considering I've read plenty of other Bogleheads say their 401(k) plans only charge flat administrative fees. I don't know how tiny your company is, but if it really is so small that they can't bring down fees, I believe the Secure ACT being proposed by congress in 2019 will allow companies to band together to offer combined 401(k) plans.

Don't know if that is already possible already for smaller companies to merge their retirement plans together to cut down costs.
OP here. My company is about as tiny as they come. We are a non-profit with probably 8-10 full time employees who qualify to participate in the 401k plan, and another 6 or so part timers who don't. That's why I was hoping to find out if the high fees were do to the small size of the company. Like maybe big companies have less expensive plans due to economy of scale or something. That 1.1% we pay is hard to swallow.
One of our fund offerings is a "guaranteed" fund that usually pays about 3.5%, guaranteed, which would be a pretty nice place for part of one's bond-type allocation, but that fee knocks it down to 2.5%, so that is a real example of how that plan fee hurts.
Hmm 8-10 employees at yours? Yeah, maybe it is an issue of scale? Wonder if anyone else who's an expert on 401(k) administrative fees can chime in. I still think it's robbery to be charge a percentage fee on YOUR assets. It's like being punished for saving more. Would be nice if they'd just charge a higher flat fee to everyone instead.

My company has about several thousand employees. I can't find the document, but I swear our annual participant fee actually went down in 2019 from $73 to $70, but I just can't find that form in my emails or on their website.
McDougal wrote:
Wed Aug 21, 2019 5:57 am
Dumb question. I guess I should call Fidelity, and I will, but are any administration or other fees beyond ER located on monthly/periodic statements?
The document that specified my plans administrative fees was called an "ERISA 404 Participant Fee Disclosure" where it specified the annual administrative expense paid by each 401(k) participant.

Based on the title of our document, I'm presuming Fidelity would also be legally required to offer you guys a similarly titled one laying out what fees they charge and how high they are?
Last edited by index2max on Wed Aug 21, 2019 9:58 am, edited 1 time in total.

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CyclingDuo
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Re: How much does your employer 401k plan charge?

Post by CyclingDuo » Wed Aug 21, 2019 7:00 am

TheEleven wrote:
Mon Aug 19, 2019 7:50 pm
I work in a tiny company, just a handful who are in our 401k. The plan charges, on top of the individual ER's for each fund available, a 1.1% plan administration fee that blankets the whole thing. Is this high for a small company 401k plan?
Not sure how that 1.1% stacks up against other small company 401k plans, but IMO - that's pretty high. :shock:

We pay an annual administrative fee for 3 out of 4 plans on top of the low cost underlying Vanguard funds:

403b #1 - $0
403b #2 - .18% administrative annual fee
457b #1 - .18% administrative annual fee
401k #1 - $40 annual administrative fee

Schwab & TD Ameritrade Self Directed Brokerage Window options within the 403b/457b plans available for an annual .50% fee.

Having a plan with higher fees means that over the course of one's career, you would have to save more than employees who work in a lower cost plan. How much more? This chart shows the difference between a plan that has combined ER and annual administrative wrap fees of only .08% compared to one's that charge more. Your plan would be less than the higher cost plans illustrated, but you get the point. You, as an employee, are paying more than many of us.

Image


How a 1% Fee Could Cost Millennials $590,000 in Retirement Savings

https://www.nerdwallet.com/blog/investi ... gs-impact/


Don't let high costs eat away your returns

https://investor.vanguard.com/investing ... t-of-costs
"Everywhere is within walking distance if you have the time." ~ Steven Wright

skibummer
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Joined: Wed Aug 07, 2019 5:44 pm

Re: How much does your employer 401k plan charge?

Post by skibummer » Wed Aug 21, 2019 7:23 am

Small group <50 employees with $28M plan assets
Schwab Institutional and VG Admiral level index fund pricing with Charles Schwab Retirement Plan Services (all asset classes represented-a slice and dicer’s dream), Flat annual record keeping fee of $150/year per participant, Schwab Brokerage option (PCRA) at no charge. The OP’s 401(k) fees are extremely high and you should send out an RFP to several companies. I would get quotes from Vanguard, Schwab, Fidelity, and Employee Fiduciary.
Last edited by skibummer on Wed Aug 21, 2019 8:28 am, edited 1 time in total.

MathIsMyWayr
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Location: CA

Re: How much does your employer 401k plan charge?

Post by MathIsMyWayr » Wed Aug 21, 2019 8:05 am

McDougal wrote:
Wed Aug 21, 2019 5:57 am
Dumb question. I guess I should call Fidelity, and I will, but are any administration or other fees beyond ER located on monthly/periodic statements?
I also have 401(K) at Fidelity. Administration fees are listed under Transaction History in red. They call Record Keeping Fee in our case.

MathIsMyWayr
Posts: 863
Joined: Mon Mar 27, 2017 10:47 pm
Location: CA

Re: How much does your employer 401k plan charge?

Post by MathIsMyWayr » Wed Aug 21, 2019 8:20 am

I understand administering 401(k) plans costs money and plan providers need profit. Since I assume software does it, not by hand, the incremental cost should be minimal. How do those expensive plan providers compete against lower cost providers? Why don't employers ask Vanguard, Fidelity, Schwab, etc, to be enrolled in one of their inexpensive plans on the shelf?

GuineaPig
Posts: 64
Joined: Tue Jun 20, 2017 10:50 am

Re: How much does your employer 401k plan charge?

Post by GuineaPig » Wed Aug 21, 2019 10:10 am

The company I work at has just 3 participants in the 401k and a total of ~$300,000 in assets -- so even smaller than yours. There are three different quarterly fees presented in a somewhat confusing fashion, but when you add them up, we pay about 0.7% annually.

While this is higher than I like, it also seems to be fairly standard for companies this small. At my previous employer, which had about 20 employees, there was no annual management fee that I was aware of (though the employer may have paid it), but the cheapest S&P 500 index fund had a 0.65% expense ratio, whereas at my current job, we've got various Vanguard index funds with expense ratios between 0.04% and 0.07%.

Last year, I did suggest to my employer that we look for another administrator with lower fees (the company owner is also a participant in the plan, so he would benefit as well), but he was not prepared to do so and I didn't push too hard, because he gives a solid contribution to our retirement accounts, which more than covers any expenses. However, he did let me discuss the investment options with the plan administrator and I was able to get a bunch of Vanguard index funds added, whereas previously there was only one.

In the end, the level of the fee irritates me and is expensive -- but it is still worth it for me to max out my 401k contribution (after also maxing out IRAs, etc), especially given that the investment options themselves are decent, besides the lack of an international index fund.

In your case, I think 1.1% is on the high side, but not as crazily beyond what's normal for small employers as you might think, as long as there are some good investment options. You might also raise the expense issue with management and see if there are alternative companies to handle the 401k at your employer.

P.S. I helped my wife's employer set up a SIMPLE IRA for her at Fidelity. The plan includes just two people -- my wife and her employer. There are zero fees whatsoever, including zero fees for the Fidelity index funds themselves. Though the contribution limit is significantly lower.

ishkadetto
Posts: 59
Joined: Thu May 24, 2018 2:49 pm
Location: California, USA

Re: How much does your employer 401k plan charge?

Post by ishkadetto » Wed Aug 21, 2019 11:50 am

index2max wrote:
Wed Aug 21, 2019 7:00 am
McDougal wrote:
Wed Aug 21, 2019 5:57 am
Dumb question. I guess I should call Fidelity, and I will, but are any administration or other fees beyond ER located on monthly/periodic statements?
The document that specified my plans administrative fees was called an "ERISA 404 Participant Fee Disclosure" where it specified the annual administrative expense paid by each 401(k) participant.
Seconding this. The "404a-5 Plan & Investment Notice" is the only place where I see the fees spelled out. The quarterly statements just give a dollar amount for "general administrative charges" then goes on to say "Additional charges associated with the plan's administrative expenses for the quarter were paid from the total annual operating expenses of the investment options in which you are invested."

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