401(k) Fees Explained: What You’re Really Paying (And What’s Reasonable)

Most business owners don’t know exactly what they’re paying for their 401(k).

Not because they don’t care—but because the fee structure is rarely clear.

If you’ve ever looked at your plan and thought:

• Why are there multiple fees?
• Who is actually getting paid here?
• Is this normal?

You’re not alone.

The 3 Types of 401(k) Fees (And Where They Hide)

Most plans have three layers of cost:

1. Investment Fees

Expense ratios inside the funds

👉 Typically: 0.03% – 1.50%+

This is where plans quietly get expensive—especially with proprietary funds.

2. Recordkeeping / Platform Fees

What you pay to run the plan

👉 Typically:

• $50–$150 per participant/year
• or 0.10% – 0.50%

Often bundled. Not always obvious.

3. Advisory / TPA Fees

The people responsible for running and maintaining the plan

👉 Can be:

• Flat fee
• Per participant
• Asset-based

This is where the value should be—and where transparency matters most.

What a “Normal” 401(k) Costs

For a small to mid-sized plan:

👉 ~0.50% to 1.50% all-in

But that range doesn’t tell the full story.

Two plans with identical costs can be:

• Well-managed and efficient
• Or neglected and overpriced

The difference isn’t just the fee.

It’s whether anyone is actually paying attention.

Where Plans Go Wrong

It’s rarely one big issue.

It’s a combination of small things:

• Layered fees no one explains
• Revenue sharing that goes unchecked
• Expensive funds left in place too long
• No ongoing review
• Advisors who show up once a year—if that

That’s how plans drift.

What Actually Matters

The goal isn’t the lowest fee.

It’s a plan that is:

• Priced reasonably
• Actively managed
• Aligned with your business

That requires judgment, ownership, and accountability—not just a platform.

How I Structure My Fees

I keep this simple.

In most cases, I charge a percentage of plan assets—typically around:

👉 0.50% (50 bps)

That means:

• If your plan is small, my fee is small
• As the plan grows, my fee grows with it

No large upfront costs just to get started.

What That Covers

Even at smaller plan sizes, you’re getting:

• Setup guidance
• Ongoing oversight
• Help when something doesn’t look right

You’re not on your own just because the plan is small.

When It’s More Involved

Some plans are simple.

Others require more work.

If we’re:

• Coordinating closely with your CPA
• Redesigning the plan
• Running multiple scenarios
• Spending meaningful time on strategy

That’s separate work.

If it comes up, I’ll flag it ahead of time.

TPA & Administrative Costs

Administrative work still needs to happen.

That can be:

• Built into a platform
• Handled by a third-party administrator
• Or structured separately

I’ll recommend the setup that makes the most sense based on:

• Plan size
• Complexity
• Long-term goals

What I Don’t Do

• No commissions
• No revenue sharing
• No product sales
• No cross-selling IRAs

I work exclusively on corporate retirement plans.

Why Independence Matters

When fees aren’t clear, incentives matter.

Some advisors:

• Receive revenue sharing
• Push proprietary funds
• Treat 401(k)s as a side business

Even when intentions are good—the structure matters.

When you work with me:

• Compensation is transparent
• No ties to providers or fund companies
• Decisions are based on what actually fits

Bottom Line

Most plans don’t have a fee problem.

They have a visibility and oversight problem.

Once you understand what you’re paying—and someone is actually responsible for managing it—

things tend to fall into place.

Want a Second Opinion?

If you’re not sure what you’re paying—or whether it’s reasonable—I’ll take a look.

I’m not here to sell you anything.
But if what I say makes sense and we’re a good fit for each other, you might want to hire me.