A reasonable 401(k) plan typically costs somewhere between 0.50% and 1.10% of assets per year in total fees, with the fair number for your plan depending mostly on how large it is. Plans holding under $1 million in assets often run above 1.30%, while plans managing hundreds of millions can come in under 0.30%. If your plan’s all-in cost is well above the benchmark for its size, that’s a real problem, because every fraction of a percent compounds against your balance for the length of your career.
Benchmarks by Plan Size
Plan size drives cost more than any other factor. A joint study by BrightScope and the Investment Company Institute put the average across all plans at 0.87% of assets, but the average participant sits in a plan costing about 0.55%, since most workers are at larger employers with better pricing.
Total plan costs generally break down like this:
- Under $1 million in assets: about 1.33%
- $1 million to $10 million: about 1.05%
- $10 million to $50 million: about 0.76%
- $50 million to $100 million: about 0.46%
- $100 million to $500 million: 0.37% to 0.40%
- Over $500 million: about 0.28%
More recent figures from the 2025 edition of the 401k Averages Book show a $5 million plan averaging 1.08% and a $50 million plan averaging 0.76%. A $1 million plan with 100 participants ranged from 0.87% to 3.56% depending on the provider, which is the clearest sign that small-plan pricing varies enormously by who runs the plan. If your plan sits at the high end of its size category, that gap is worth investigating.
The Three Fees You Are Actually Paying
Your total cost is three layers stacked together, and each one hits differently.
Investment Fees
These are the biggest piece. Every mutual fund or target-date fund in the plan carries an expense ratio, deducted directly from returns before you see them. A fund that earns 8% before expenses and charges 0.50% delivers 7.50% to you. Nothing appears as a line item on your statement because it’s baked into the reported performance.1Employee Benefits Security Administration (EBSA). A Look at 401(k) Plan Fees
What’s reasonable here depends on whether the fund is active or passive. The industry-wide average expense ratio at the end of 2025 was 0.39%, but low-cost index providers came in around 0.06%.2Vanguard. Vanguard Delivers Landmark Cost Savings Target-date funds, the default choice in most plans, averaged 0.41% overall but ran as low as 0.08% in index-based versions.3Vanguard. Target Retirement Funds
Within any plan, this is usually the biggest lever you personally control. An S&P 500 index fund might charge 0.02% to 0.05%. An actively managed large-cap fund on the same menu might charge 0.60% to 1.00%. Most actively managed funds underperform their benchmark index over long stretches, so paying up rarely produces better results. If your plan offers both index and active versions of a target-date fund, the index version is usually the better deal, sometimes by 0.30% to 0.50% a year.
Administrative Fees
Recordkeeping, legal compliance, accounting, and trustee services all cost money, and those costs get billed either as a flat per-participant charge or as a percentage of assets. Large plans with $200 million or more in assets pay recordkeeping fees of about $97 per participant per year. Smaller plans pay far more per head because the same fixed costs spread across fewer people.4U.S. Department of Labor, Employee Benefits Security Administration (EBSA). Understanding Retirement Plan Fees and Expenses
Individual Service Fees
These are one-time charges triggered by specific actions, like taking a loan against your balance or processing a court-ordered division of your account during a divorce. The DOL’s example materials show charges such as $50 annual fees for certain account features. Most participants won’t hit these in a typical year, but it’s worth knowing they exist before you request a loan.1Employee Benefits Security Administration (EBSA). A Look at 401(k) Plan Fees
What Your Statement Won’t Show You
Many plans use a structure called revenue sharing, where part of each fund’s expense ratio flows back to the recordkeeper to cover administrative costs. Mutual funds may also charge 12b-1 fees, ongoing charges paid from fund assets that can be used to pay plan service providers as part of a bundled arrangement.1Employee Benefits Security Administration (EBSA). A Look at 401(k) Plan Fees
Revenue sharing itself isn’t the problem. The problem is that it makes your real costs hard to see. Your quarterly statement shows fund returns net of expenses but doesn’t break out how much of those expenses went to investment management versus subsidizing recordkeeping. Two funds with the same 0.60% expense ratio might be splitting that money very differently behind the scenes. The DOL warns explicitly that participant statements “do not include charges paid indirectly from your investments.”1Employee Benefits Security Administration (EBSA). A Look at 401(k) Plan Fees
This is why all-in cost is the right number to focus on. A fund’s expense ratio might read 0.26%, but once you add 12b-1 fees, sub-transfer agent fees, administrative charges, and revenue sharing, the true annual cost of a typical plan can reach 0.70% or more.
How to Find Your Plan’s Fees
Your plan is legally required to give you a document that breaks down every fee affecting your account. It’s called the participant fee disclosure, or the 404(a)(5) notice, and it must be provided at least once a year under Department of Labor regulations.5Federal Register. Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans It’s usually posted on the online portal where you check your balance.
The most useful section is the investment comparison chart. It lists every fund in the plan alongside a column called “Total Annual Operating Expenses,” shown as both a percentage and a dollar figure per $1,000 invested. A fund listed at $4.50 per $1,000 has a 0.45% expense ratio. Add up the ratios of the funds you actually hold, weighted by how much you have in each, and you get a solid estimate of your investment fees.
The disclosure also lists administrative fees charged to your account each quarter with a short description of what they cover. Look for a note at the bottom saying additional administrative costs are paid through the funds’ operating expenses. That’s the signal that revenue sharing is in play.
For a wider view of what the whole plan pays, the annual Form 5500 filing with the Department of Labor contains a Schedule C that details payments to every service provider. These filings are public and searchable through the DOL’s online database.6U.S. Department of Labor. Form 5500 Datasets The Form 5500 won’t show what you personally paid, but it will show what the plan paid its recordkeeper, advisor, and other vendors.
Why Small Differences Cost So Much
Fees matter because every dollar taken out stops compounding. A DOL-cited analysis found that a 1% difference in expense ratios over 35 years left the lower-cost investor with a balance 23% higher, even though both put in the same amount and held funds with the same gross returns.7U.S. Department of Labor. Study of 401(k) Plan Fees and Expenses
In real dollars: an account that would grow to roughly $1,500,000 with no fees drops to about $1,110,000 at a 1% annual charge. Over $400,000 you never see. A plan charging 1.30% when a comparable plan charges 0.50% isn’t just a little expensive. Over a 30-year career, that 0.80% gap can be the difference between retiring on schedule and working several more years.
Your Employer’s Legal Duty on Fees
Under ERISA, anyone managing a 401(k) must act solely in the interest of participants and with the care and diligence of a prudent person familiar with such matters.8Office of the Law Revision Counsel. 29 U.S. Code 1104 – Fiduciary Duties That standard applies directly to fees. In Tibble v. Edison International, the Supreme Court held that plan fiduciaries have an ongoing duty to monitor investments and remove imprudent options, meaning an employer isn’t off the hook just because the plan menu includes some cheap funds if it also carries needlessly expensive share classes of the same investment.9Justia U.S. Supreme Court. Tibble v. Edison International, 575 U.S. 523 (2015)
Excessive fee lawsuits have become one of the most active areas of ERISA litigation. Common claims include paying above-market recordkeeping fees, holding retail-class fund shares when cheaper institutional shares were available, and failing to use plan forfeitures to offset administrative costs. If a court finds a fiduciary breach, the employer or plan committee can be personally liable to restore the excess fees plus what those dollars would have earned. The statute of limitations is generally six years from the breach, or three years from when the participant gained actual knowledge of it.10Office of the Law Revision Counsel. 29 U.S. Code 1113 – Limitation of Actions
The practical point: your employer has a legal obligation to make sure fees are reasonable, and once they’re put on notice that fees may be out of line, they have a duty to look into it.
What to Do If Your Fees Are Too High
Start with the piece you control. Review the fund lineup and move your allocations toward the lowest-cost options that fit your strategy. In most plans, that means the index funds. Swapping an actively managed target-date fund for an index-based one can save 0.30% or more a year on its own.
If the plan itself is the problem rather than your choices within it, raise it with HR or whoever administers your benefits. Many employers haven’t benchmarked their plan recently and genuinely don’t know how it compares. A specific question works better than a complaint: “Our plan’s all-in costs appear to be about X%. Typical plans our size run about Y%. Has the company compared our fees to the market lately?” Once an employer is on notice, the fiduciary duty to investigate kicks in, so a documented inquiry carries real weight.
If in-plan options are limited and fees stay high, at least contribute enough to capture your full employer match. The match is free money that offsets even high fees. Above the match, an IRA with a low-cost provider can be a better home for additional retirement savings until the plan improves. IRA contribution limits are lower than 401(k) limits, so this works as a supplement, not a replacement.