Are You Spending Too Much on Your 401(k) Plan?

Birschel, Dee
September 2004
Benefits Quarterly;2004 Third Quarter, Vol. 20 Issue 3, p83
Academic Journal
An issue for concern in 2004 was whether mutual fund and administration fees were reasonable as mandated by the U.S. Employee Retirement and Income Security Act. Financial officers should examine how much they pay to determine if the 401(k) plan is reasonable. There are several warning signs that the fees are unreasonable, such as a low plan administration fee, an average participant balance over $25,000, wrap or asset-based fees, unknown vendor compensation from funds, heavy reliance on proprietary funds, 12b-1 fees kept by the vendor, unknown stable value management fee and unknown compensation of the financial advisor. Financial officers should take action by talking to the vendor and asking for a plan services fee that is not asset-based if they suspect the fees are too high.


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