Investment fees are still falling across all plan sizes, but smaller plans continue to pay significantly more than their larger counterparts—and cost variation across providers remains substantial.
That’s the picture from the newly released 26th Edition of the 401k Averages Book, the only independent benchmarking resource focused exclusively on 401(k) plan cost data. Author Joseph W. Valletta, CFA, said the data shows continued downward pressure on investment fees, with total plan costs declining in all but the smallest plan scenario. Advisor compensation was frequently flat, though more scenarios showed declines compared to prior years.
The fee compression reflects ongoing competition, increased use of lower-cost investment vehicles (including zero revenue-sharing funds), and broader adoption of institutional pricing structures. Investment-related costs decreased in every plan scenario analyzed, with fees declining between 0.03% and 0.06%.
But scale still matters. A $5 million plan averages 1.04% in total plan costs and 0.37% in advisor compensation, while a $50 million plan averages 0.72% and 0.16%, respectively. Recordkeeping fees in smaller plans were flat to slightly higher in some scenarios, influenced in part by shifts in service and pricing models.
Perhaps the most striking finding is the range of costs across providers. A 50-participant plan with $500,000 in assets shows total plan costs ranging from 0.99% to 3.77%—a gap that underscores the importance of regular benchmarking.
“Fiduciaries have a responsibility to understand and evaluate all components of plan fees—not just investment costs, but recordkeeping and advisor compensation as well,” Mr. Valletta noted. “Benchmarking is one of the most effective tools available to support that process.”
He also pointed to the litigation environment as a reason to stay vigilant. “With continued litigation risk in the retirement plan space, strong governance practices are more important than ever. Regular benchmarking of plan fees is a critical step in demonstrating prudent oversight and helping ensure participants are receiving competitive pricing.”
First published in 1995, the 401k Averages Book is widely used by fiduciaries, advisors, and service providers to benchmark fees, support governance processes, and inform plan decision-making. The 26th Edition features 24 plan scenarios covering plans with 10 to 2,000 participants, updated fee benchmarks for investment, recordkeeping, and advisor compensation, infographics illustrating fee trends and per-participant costs, and practical reference points for advisors and consultants.
The data shows that fees are trending in the right direction, but that doesn’t mean every plan is getting a good deal. The wide dispersion in costs—especially among smaller plans—means benchmarking remains a fiduciary imperative, not a nice-to-have.
