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5 responses to “What is an Appropriate Fee that a 401k Plan Should Pay?”

  1. August 8, 2013 | The Morning Pulse

    […] What’s an Appropriate Fee for a 401(k) Plan? […]

  2. c jarvis

    When using figures for 401k fee benchmarking, are the averages quoted here representative of administrative fees or for all fees including investment fees that reduce net returns + admin?

  3. pat

    Accounting industry has no incentive to keep fees low in that they are “portion-takers” of the fees charged, and therefore, do little to provide a watchdog climate for 401K siphoning and pilferage. If anything, they are aiders and abettors in the process by proposing methods by which such siphoning occurs to create this captive market of pilferage and insure it has qualified immunity when, in reality, most are PBGC maneuvers-in-process, especially with paper derivatives and their deceptions, promoting Enron-like fraud that no one is jailed for.

  4. Nel

    401(k) plan costs are primarily paid in one of two ways: 1.) Revenue Sharing: Soft-dollar commission revenue in the form of loads, plan AUM, and 12b-1 fees. 2.) Fee-For-Service: Hard-dollar costs charged directly for essential plan-level services.
    “What’s a Small 401k Plan To Do?” Examine at two things: Price and Performance. For performance, determine whether the plan’s portfolio returns outperform an APPROPRIATE, custom benchmark on a long-term time horizon. For most small business plans, the answer is “no.” Next, compare the “All-In” costs of the current plan to that of a low cost, fee-for-service organization. There are some excellent options for small businesses. Get fee proposals from several. Finally, for the fiduciary (whose duty is determining whether the plan fees are reasonable), decide whether the high costs of the current plan are worth the privilege of trailing the index, or whether your participants would be better served with low-cost index funds in a low-cost 401(k) plan.

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