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How much are your company 401(k) plan fees?

Do you really know how much your company 401(k) plan fees are?
You may be surprised.

Recently we added a new company plan to the Shelton 401(k) platform. Prior to this company selecting us, we dug into the fees that this company was paying its previous providers. The owner thought that he was paying $2,000 a year, but in reality, the company was paying $9,000 a year – a $7,000 surprise! That is a huge amount of money to be surprised about.

Why was this client surprised? The owner is a very bright person and highly professional. The surprise was likely caused by two reasons. The first is that there are different ways in which 401(k) service providers charge fees, and it is not uniform across all the players. As well, each plan sponsor can decide whether it wishes to have the company or the employees pay the fees so it can be easy to lose track.

Every plan sponsor has the obligation to ensure that the plan’s fee structure is reasonable. Excessive fees have been the source of a huge number of lawsuits over the years. So how does a business owner know whether the company 401(k) fee structure is reasonable if they don’t even know what they are paying?

Here is a list of fees that your plan could have:

  1. Advisor fee
  2. Fiduciary fee
  3. Plan Administration fee
  4. Recordkeeping fee
  5. Custodian fee

Some of these are flat annual fees and some are a percentage of assets quoted in basis points. For reference, one basis point is one-hundredth of one percent. Service providers provide annual fee disclosure statements that can sometimes be a bit cryptic to read.

Whether you are considering starting a new small business 401(k) plan to take advantage of the SECURE Act tax credits or whether you would like to submit your fees through a fast-reply form, know that you can always set a call for us to complete a complementary fee assessment on your current plan. We love to analyze fees because investment professionals generally love number crunching – it runs through our veins.

Ultimately, Shelton 401(k) offers a bundled solution and we have already done the fee analysis on behalf of many of our customers. Schedule time with me today so that we can look to save you money!

Author

  • Josh Fudge joined Shelton Capital Management in 2019.  He is a member of the Advisory Services Team with a focused responsibility on sales and marketing initiatives.

    Prior to joining Shelton Capital Management, Josh held various roles in the investment industry most recently with RBC Wealth Management where he was responsible for investment analysis and client growth. The majority of Josh’s career has been focused on sales and distribution as a Director with WHV Investments, a VP at SteelPath/OppenheimerFunds, and various positions at Janus Capital Group. Away from work he enjoys skiing, hiking, and spending time outdoors with his wife, three children, and their dog Bailey.

    Josh is a graduate of Miami University (Oxford, OH).

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