401k admin fees

[justsomeguy2018]

Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?

[ondarvr]

Total is 1%
Not good, but with a match and generous contribution amounts it's better than other options.

[7eight9]

I've had money in a stable value fund that actually lost money once the quarterly fees were subtracted. And this wasn't a small employer with few plan participants - it was a center Strip property that anyone familiar with Las Vegas would recognize in an instant. My "safe" investment wasn't as good as a proverbial mattress. And there was no match.

[TimRCM]

Decided to quite lurking (after several years) and make my account to complain on this thread

I don't have to deal with any admin fees for my 401k, but I do have pretty outrageous expense ratios. My S&P fund is around 0.28% and my international fund is 0.70% and a bit too heavy on emerging markets. The target date funds are lower, but are very poorly designed in my opinion with high allocations to stuff like REITs and precious metals that I don't care for. In a nutshell, I really wish I could just do an annual in-service rollover to an IRA to buy VT, but I suppose I don't have it that bad compared to others.

My HSA, on the other hand, does have a monthly admin fee of 0.03%. I try to max it every year, so that's going to get very pricey given enough time. It has a smattering of Vanguard funds available and I just use a target date in it.

[Equitius]

.....

[anon_investor]

Current megacorp employer: flat monthly fee (regardless of balance size), totals less than $35/yr, invested in 0.01% expense ratio index funds.

Prior law large firm employer: zero fees, invested in 0.03% expense ratio index funds.

[exodusNH]

Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?

Out of curiosity, with your prior plans, what were the expense ratios? Sometime plans will hide the administrative costs in the ER. If your current plan has much lower ERs than past ones, the overall costs likely haven't gone up -- they just show up differently.

About 18 months ago, my company switched to the transparent pricing model. Now, the ERs reflect the actually MF ER and there are separate charges for administrative and advisor fees. Prior to this, a Vanguard plan with a published ER of 0.03% would show up in the plan with an ER or 0.65% because they were baking the annual 0.62% fee into the ER.

In fact, we wouldn't have had access to Vanguard funds back then because they don't do revenue sharing with the advisors. By switching to the transparent model, we've been able to bring in Fidelity index funds (0.01% ER) and some Vanguard ones as well.

[JBTX]

Some companies do that to help cover administrative and broker fees and employer match. More often smaller companies. It's too bad because it is a tax inefficient way to cover them.

[Turk_February]

I don't have to deal with any admin fees for my 401k, but I do have pretty outrageous expense ratios. My S&P fund is around 0.28%

That is far from outrageous. My wife's 403(b) non-profit S&P fund is 1.48%, and is the lowest option. Obviously we only contribute 3% to get her 1.5% match. I even petitioned to get them to switch provider, but no dice.

[tashnewbie]

My HSA, on the other hand, does have a monthly admin fee of 0.03%. I try to max it every year, so that's going to get very pricey given enough time. It has a smattering of Vanguard funds available and I just use a target date in it.

You could look into doing an annual trustee to trustee transfer of your HSA funds to a Fidelity HSA, which has no fees (except the fees of funds you choose to use, and Fido has zero cost fee options).

[DA200]

Wife’s 401k has low expense ratio index funds (0.04%), but 1.1% administration fees. With $300K balance she pays over $3,300 in administration fees... We keep this account in 100% bonds so it does not grow as quickly as our other retirement accounts with near zero fees. The day after she retires we will rollover to an IRA at Fidelity or Vanguard.

[justsomeguy2018]

Wife’s 401k has low expense ratio index funds (0.04%), but 1.1% administration fees. With $300K balance she pays over $3,300 in administration fees... We keep this account in 100% bonds so it does not grow as quickly as our other retirement accounts with near zero fees. The day after she retires we will rollover to an IRA at Fidelity or Vanguard.

Wow...and I thought mine were high!

[justsomeguy2018]

Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?

Out of curiosity, with your prior plans, what were the expense ratios? Sometime plans will hide the administrative costs in the ER. If your current plan has much lower ERs than past ones, the overall costs likely haven't gone up -- they just show up differently.

About 18 months ago, my company switched to the transparent pricing model. Now, the ERs reflect the actually MF ER and there are separate charges for administrative and advisor fees. Prior to this, a Vanguard plan with a published ER of 0.03% would show up in the plan with an ER or 0.65% because they were baking the annual 0.62% fee into the ER.

In fact, we wouldn't have had access to Vanguard funds back then because they don't do revenue sharing with the advisors. By switching to the transparent model, we've been able to bring in Fidelity index funds (0.01% ER) and some Vanguard ones as well.

Both plans had fairly low cost index funds (sp idx, fidelity 500). The bond funds are a little on the pricier side.

[dogagility]

Megacorp, administered by Merrill Lynch
$125 flat annual administrative fee
Bond, US equity and international equity index fund ERs: 0.02 - 0.04%
Target date fund ERs: ~0.6%

Choosing to invest in a target date fund in this plan would be a hard pill to swallow for a boglehead.

[bugleheadd]

Non megacorp, 10k employees

Fidelity 401k plan

Record keeping fee of $60/yr

Admin fee = $2.5/yr

100% in VIIIX.

I used to be in vanguard target fund and small cap fund, but admin fees were a lot higher, like 20-40$/yr

[Stinky]

Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?

I sat on the “Retirement Committee” at my former employer, and the topic of apportionment of plan expenses to participants was always an interesting issue. Good arguments could be made on both sides of the conversation.

We did the “flat charge” method. That may have been influenced by the size of the 401k balances of those on the Committee, who would have paid much more in fees if the “percent of balance” method was used.

Another interesting question was whether to charge retired/terminated participants the same amount as those who were still employed. We settled on a doubled quarterly charge for the non-active folks, in part to keep the fees low to encourage participation in the plan by active employees.

[wbarabas]

I'm with Empower Retirement and they charge .79% for administration fees. They do have good iShare index funds which help keep costs a little lower.

[GuyInFL]

Another interesting question was whether to charge retired/terminated participants the same amount as those who were still employed. We settled on a doubled quarterly charge for the non-active folks, in part to keep the fees low to encourage participation in the plan by active employees.

Our company recently started charging nominal admin fees ($30/yr) and they said they weren’t allowed to charge ex-employees higher fees. Funds are very low fee at around 0.03% so I can’t complain.

[Triple digit golfer]

I'm with Empower Retirement and they charge .79% for administration fees. They do have good iShare index funds which help keep costs a little lower.

Same. Empower Retirement. I think it's something 0.25% and 0.54%, two separate fees amounting to 0.79%. Ours used to be higher, actually.

[teacher2163]

I am a school teacher so we have a 403B plan. It is through Vanguard and the fees are a flat $60/year. There are other higher cost providers but a co worker lobbied hard for Vanguard years ago. The school agreed, but he had to get 5 people to sign up, which he did. We also have a 457 Deferred Comp plan and the fees are .14%, but are capped at $220/year. Both plans offer low cost index and bond funds.

[Pandemic Bangs]

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?

I don't know your balance but that's a bad arrangement, imo.

We have a flat fee that is waived for balances below a modest threshold (maybe $5K or $10K). Fee is maybe $40 per SSN and plan admin is Fidelity. Plan assets are low ten figures and maybe 10K employees but we work very aggressively with Fidelity. All investment options are low-cost (think VG index funds) and there is no plan wrap fee.

Flat fee penalizes the low earners/new employees and percent penalizes the high earners/long-term employees so we use the hybrid model as the "fairest." Our committee has ample representation from both ends of the spectrum.

You and others should talk to HR.

[bugleheadd]

Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?

21k in fees is what % of account balance?

[justsomeguy2018]

Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?

21k in fees is what % of account balance?

$21 in quarterly fees, $97k balance (it is not my only 401k).

Dont want to roll over other my two 401Ks due to the fees in this 401k.

Think .08% is the admin fee in current 401k. Vs $7.50 a quarter in other 401k's.

[mauwong]

My last employer's 401K with Fidelity is not bad.

They covered the record keeping fees while I was with them. After leaving though I'm paying a flat fee of $64 annually (same as OP at $21 quarterly).

Fund choices are great with access to institutional index funds with Fidelity and Vanguard (including Target Retirement Funds) coupled with some more expensive actively managed funds.