401k admin fees

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
justsomeguy2018
Posts: 1258
Joined: Wed Oct 03, 2018 8:11 pm

401k admin fees

Post by justsomeguy2018 »

Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?
ondarvr
Posts: 75
Joined: Tue Dec 22, 2020 6:03 pm

Re: 401k admin fees

Post by ondarvr »

Total is 1%
Not good, but with a match and generous contribution amounts it's better than other options.
7eight9
Posts: 1897
Joined: Fri May 17, 2019 7:11 pm

Re: 401k admin fees

Post by 7eight9 »

I've had money in a stable value fund that actually lost money once the quarterly fees were subtracted. And this wasn't a small employer with few plan participants - it was a center Strip property that anyone familiar with Las Vegas would recognize in an instant. My "safe" investment wasn't as good as a proverbial mattress. And there was no match.
I guess it all could be much worse. | They could be warming up my hearse.
TimRCM
Posts: 3
Joined: Tue Jan 12, 2021 5:55 pm

Re: 401k admin fees

Post by TimRCM »

Snip.
Last edited by TimRCM on Wed May 05, 2021 11:34 pm, edited 2 times in total.
Equitius
Posts: 119
Joined: Sat Apr 27, 2013 6:32 am

Re: 401k admin fees

Post by Equitius »

.....
Last edited by Equitius on Sun Jan 24, 2021 5:06 pm, edited 2 times in total.
User avatar
anon_investor
Posts: 6916
Joined: Mon Jun 03, 2019 1:43 pm

Re: 401k admin fees

Post by anon_investor »

Current megacorp employer: flat monthly fee (regardless of balance size), totals less than $35/yr, invested in 0.01% expense ratio index funds.

Prior law large firm employer: zero fees, invested in 0.03% expense ratio index funds.
exodusNH
Posts: 223
Joined: Wed Jan 06, 2021 8:21 pm

Re: 401k admin fees

Post by exodusNH »

justsomeguy2018 wrote: Tue Jan 12, 2021 5:45 pm Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?
Out of curiosity, with your prior plans, what were the expense ratios? Sometime plans will hide the administrative costs in the ER. If your current plan has much lower ERs than past ones, the overall costs likely haven't gone up -- they just show up differently.

About 18 months ago, my company switched to the transparent pricing model. Now, the ERs reflect the actually MF ER and there are separate charges for administrative and advisor fees. Prior to this, a Vanguard plan with a published ER of 0.03% would show up in the plan with an ER or 0.65% because they were baking the annual 0.62% fee into the ER.

In fact, we wouldn't have had access to Vanguard funds back then because they don't do revenue sharing with the advisors. By switching to the transparent model, we've been able to bring in Fidelity index funds (0.01% ER) and some Vanguard ones as well.
JBTX
Posts: 8207
Joined: Wed Jul 26, 2017 12:46 pm

Re: 401k admin fees

Post by JBTX »

Some companies do that to help cover administrative and broker fees and employer match. More often smaller companies. It's too bad because it is a tax inefficient way to cover them.
Turk_February
Posts: 17
Joined: Sat Jul 04, 2020 11:06 am

Re: 401k admin fees

Post by Turk_February »

TimRCM wrote: Tue Jan 12, 2021 6:03 pm I don't have to deal with any admin fees for my 401k, but I do have pretty outrageous expense ratios. My S&P fund is around 0.28%
That is far from outrageous. My wife's 403(b) non-profit S&P fund is 1.48%, and is the lowest option. Obviously we only contribute 3% to get her 1.5% match. I even petitioned to get them to switch provider, but no dice.
tashnewbie
Posts: 1585
Joined: Thu Apr 23, 2020 12:44 pm

Re: 401k admin fees

Post by tashnewbie »

TimRCM wrote: Tue Jan 12, 2021 6:03 pm My HSA, on the other hand, does have a monthly admin fee of 0.03%. I try to max it every year, so that's going to get very pricey given enough time. It has a smattering of Vanguard funds available and I just use a target date in it.
You could look into doing an annual trustee to trustee transfer of your HSA funds to a Fidelity HSA, which has no fees (except the fees of funds you choose to use, and Fido has zero cost fee options).
DA200
Posts: 223
Joined: Fri Feb 06, 2015 3:47 pm

Re: 401k admin fees

Post by DA200 »

Wife’s 401k has low expense ratio index funds (0.04%), but 1.1% administration fees. With $300K balance she pays over $3,300 in administration fees... We keep this account in 100% bonds so it does not grow as quickly as our other retirement accounts with near zero fees. The day after she retires we will rollover to an IRA at Fidelity or Vanguard.
Topic Author
justsomeguy2018
Posts: 1258
Joined: Wed Oct 03, 2018 8:11 pm

Re: 401k admin fees

Post by justsomeguy2018 »

DA200 wrote: Tue Jan 12, 2021 8:57 pm Wife’s 401k has low expense ratio index funds (0.04%), but 1.1% administration fees. With $300K balance she pays over $3,300 in administration fees... We keep this account in 100% bonds so it does not grow as quickly as our other retirement accounts with near zero fees. The day after she retires we will rollover to an IRA at Fidelity or Vanguard.
Wow...and I thought mine were high!
Topic Author
justsomeguy2018
Posts: 1258
Joined: Wed Oct 03, 2018 8:11 pm

Re: 401k admin fees

Post by justsomeguy2018 »

exodusNH wrote: Tue Jan 12, 2021 6:17 pm
justsomeguy2018 wrote: Tue Jan 12, 2021 5:45 pm Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?
Out of curiosity, with your prior plans, what were the expense ratios? Sometime plans will hide the administrative costs in the ER. If your current plan has much lower ERs than past ones, the overall costs likely haven't gone up -- they just show up differently.

About 18 months ago, my company switched to the transparent pricing model. Now, the ERs reflect the actually MF ER and there are separate charges for administrative and advisor fees. Prior to this, a Vanguard plan with a published ER of 0.03% would show up in the plan with an ER or 0.65% because they were baking the annual 0.62% fee into the ER.

In fact, we wouldn't have had access to Vanguard funds back then because they don't do revenue sharing with the advisors. By switching to the transparent model, we've been able to bring in Fidelity index funds (0.01% ER) and some Vanguard ones as well.
Both plans had fairly low cost index funds (sp idx, fidelity 500). The bond funds are a little on the pricier side.
dogagility
Posts: 1646
Joined: Fri Feb 24, 2017 6:41 am

Re: 401k admin fees

Post by dogagility »

Megacorp, administered by Merrill Lynch
$125 flat annual administrative fee
Bond, US equity and international equity index fund ERs: 0.02 - 0.04%
Target date fund ERs: ~0.6%

Choosing to invest in a target date fund in this plan would be a hard pill to swallow for a boglehead. :shock:
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
bugleheadd
Posts: 695
Joined: Fri Nov 29, 2019 11:25 am

Re: 401k admin fees

Post by bugleheadd »

Non megacorp, 10k employees

Fidelity 401k plan

Record keeping fee of $60/yr

Admin fee = $2.5/yr

100% in VIIIX.

I used to be in vanguard target fund and small cap fund, but admin fees were a lot higher, like 20-40$/yr
User avatar
Stinky
Posts: 7862
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: 401k admin fees

Post by Stinky »

justsomeguy2018 wrote: Tue Jan 12, 2021 5:45 pm Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?
I sat on the “Retirement Committee” at my former employer, and the topic of apportionment of plan expenses to participants was always an interesting issue. Good arguments could be made on both sides of the conversation.

We did the “flat charge” method. That may have been influenced by the size of the 401k balances of those on the Committee, who would have paid much more in fees if the “percent of balance” method was used.

Another interesting question was whether to charge retired/terminated participants the same amount as those who were still employed. We settled on a doubled quarterly charge for the non-active folks, in part to keep the fees low to encourage participation in the plan by active employees.
It's a GREAT day to be alive! - Travis Tritt
wbarabas
Posts: 20
Joined: Mon Dec 21, 2020 9:26 am

Re: 401k admin fees

Post by wbarabas »

I'm with Empower Retirement and they charge .79% for administration fees. They do have good iShare index funds which help keep costs a little lower.
GuyInFL
Posts: 372
Joined: Thu Aug 04, 2016 7:17 pm

Re: 401k admin fees

Post by GuyInFL »

Stinky wrote: Thu Jan 14, 2021 8:05 am Another interesting question was whether to charge retired/terminated participants the same amount as those who were still employed. We settled on a doubled quarterly charge for the non-active folks, in part to keep the fees low to encourage participation in the plan by active employees.
Our company recently started charging nominal admin fees ($30/yr) and they said they weren’t allowed to charge ex-employees higher fees. Funds are very low fee at around 0.03% so I can’t complain.
Triple digit golfer
Posts: 7700
Joined: Mon May 18, 2009 5:57 pm

Re: 401k admin fees

Post by Triple digit golfer »

wbarabas wrote: Thu Jan 14, 2021 8:09 am I'm with Empower Retirement and they charge .79% for administration fees. They do have good iShare index funds which help keep costs a little lower.
Same. Empower Retirement. I think it's something 0.25% and 0.54%, two separate fees amounting to 0.79%. Ours used to be higher, actually.
teacher2163
Posts: 136
Joined: Wed Jan 15, 2020 8:21 am

Re: 401k admin fees

Post by teacher2163 »

I am a school teacher so we have a 403B plan. It is through Vanguard and the fees are a flat $60/year. There are other higher cost providers but a co worker lobbied hard for Vanguard years ago. The school agreed, but he had to get 5 people to sign up, which he did. We also have a 457 Deferred Comp plan and the fees are .14%, but are capped at $220/year. Both plans offer low cost index and bond funds.
Pandemic Bangs
Posts: 375
Joined: Sat Dec 26, 2020 3:49 pm

Re: 401k admin fees

Post by Pandemic Bangs »

justsomeguy2018 wrote: Tue Jan 12, 2021 5:45 pm
Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?
I don't know your balance but that's a bad arrangement, imo.

We have a flat fee that is waived for balances below a modest threshold (maybe $5K or $10K). Fee is maybe $40 per SSN and plan admin is Fidelity. Plan assets are low ten figures and maybe 10K employees but we work very aggressively with Fidelity. All investment options are low-cost (think VG index funds) and there is no plan wrap fee.

Flat fee penalizes the low earners/new employees and percent penalizes the high earners/long-term employees so we use the hybrid model as the "fairest." Our committee has ample representation from both ends of the spectrum.

You and others should talk to HR.
Wait 'til I get my money right | Then you can't tell me nothing, right?
bugleheadd
Posts: 695
Joined: Fri Nov 29, 2019 11:25 am

Re: 401k admin fees

Post by bugleheadd »

justsomeguy2018 wrote: Tue Jan 12, 2021 5:45 pm Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?
21k in fees is what % of account balance?
Topic Author
justsomeguy2018
Posts: 1258
Joined: Wed Oct 03, 2018 8:11 pm

Re: 401k admin fees

Post by justsomeguy2018 »

bugleheadd wrote: Thu Jan 14, 2021 1:16 pm
justsomeguy2018 wrote: Tue Jan 12, 2021 5:45 pm Going on a griping rant here -

At past employers, 401k admin fees were a standard amount, say $7.50 each quarter.

Current employer has plan fees that are a % of the total balance - so the more I contribute/grow, the more I pay in fees. Last quarter I paid $21 in 401k admin fees (vs $7.50). I fear this could be quite high later on down the road as the balance keeps growing.

How is it done at your employer?
21k in fees is what % of account balance?
$21 in quarterly fees, $97k balance (it is not my only 401k).

Dont want to roll over other my two 401Ks due to the fees in this 401k.

Think .08% is the admin fee in current 401k. Vs $7.50 a quarter in other 401k's.
mauwong
Posts: 113
Joined: Mon Aug 12, 2013 1:11 pm

Re: 401k admin fees

Post by mauwong »

My last employer's 401K with Fidelity is not bad.

They covered the record keeping fees while I was with them. After leaving though I'm paying a flat fee of $64 annually (same as OP at $21 quarterly).

Fund choices are great with access to institutional index funds with Fidelity and Vanguard (including Target Retirement Funds) coupled with some more expensive actively managed funds.
Post Reply