Business Guides

401k Averages Book Update – Large Plans Pay Less

The new release of the 18th Edition 401k Averages Book was expanded to include 401k fee information on plans with large participant account balances. “With studies showing participant account balances exceeding six figures, we thought it was a good time to add a new section to the 401k Averages Book,” said Joseph W. Valletta, co-publisher of the 401k Averages Book.

401K
Photo by 401(K) 2013

 

Prior editions showed data for plans with $10,000 and $50,000 average account balances. With the addition of the $100,000 balance information, financial professionals can choose from three sections of benchmarks. Each section is made up of eight different plan size scenarios.

“It is important to use a benchmark which reflects the characteristics of your plan,” said Valletta. Data from the Averages Book shows plans with higher average account balances pay lower total fees. The total cost for a plan with $1,000,000 in assets and 10 participants ($100,000 average account balance) is 1.47%, while a $1,000,000 plan with 100 participants ($10,000 average account balance) is 1.89%.

Other Key Findings:

  • 401k total plan costs declined for most size plans: Scenarios with 200 or more participants saw a decrease in total plan costs from last year.
  • Investment fees continued to decline: Scenarios with 200 or more participants saw a year over year decrease in total investment costs of between 0.01%-0.03%.
  • Wide range between high and low-cost providers: The range of cost is greatest within the small plan market. The range of a plan with $1,000,000 in assets and 100 participants ($10,000 average account balance) is 0.72% to 2.80%.
  • Smaller plans continue to pay higher fees than large plans: A plan with $1,000,000 in assets and 100 participants ($10,000 average account balance) is 1.89%, while a plan with $10,000,000 in assets and 1,000 participants ($10,000 average account balance) is 1.39%.

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 401k Averages Book, 18th edition, is available for $95 and can be purchased by calling (888) 401-3089 or at www.401ksource.com.