As stewards of employees’ retirement savings, 401(k) plan committees bear a significant responsibility. One of the most crucial aspects of this role is a comprehensive understanding of the fees associated with the plan. This includes not only the costs related to investments and revenue sharing but also the payments received by the recordkeeper and any advisors involved. Here’s why a thorough grasp of these fees is essential for effective plan management.

The Impact of Fees on Retirement Savings

Even seemingly small fees can significantly impact the growth of retirement savings over time. For example, a 1% fee might not sound substantial, but over decades, it can reduce an employee’s retirement savings by tens of thousands of dollars. As such, plan committees must ensure that every dollar spent is justified and that fees are competitive and reasonable.

Investment Fees and Revenue Sharing

Investment fees are often the most visible costs in a 401(k) plan. These fees cover the management and operation of the investment options offered to participants. Revenue sharing arrangements, where investment providers share a portion of the fees they collect with the plan’s recordkeeper, add another layer of complexity. Committees need to understand these arrangements thoroughly to ensure they do not lead to conflicts of interest or excessive costs.

Recordkeeper Fees

The recordkeeper is responsible for maintaining plan records, processing transactions, and providing participant services. Their fees can vary widely based on the level of service and the size of the plan. Some recordkeepers charge a flat fee, while others charge per participant or a percentage of assets under management. Understanding how and why these fees are structured is vital to ensuring that the plan receives value for the services provided.

Advisor Fees

Many 401(k) plans engage advisors to provide investment guidance and fiduciary support. Advisor fees can be structured as a flat fee, an hourly rate, or a percentage of assets. Committees must ensure these fees align with the services provided and are reasonable. It is crucial for committees to confirm whether their advisor acts as a fiduciary, as this impacts the impartiality of the advice. Transparency in advisor compensation is essential to prevent conflicts of interest and protect participants’ best interests.

Best Practices for Fee Management

To effectively manage 401(k) fees, plan committees should adopt the following best practices:

  1. Conduct Regular Fee Audits: Regularly review all plan fees to ensure they are competitive and reasonable. This involves comparing the plan’s fees against industry benchmarks and considering alternative service providers if necessary.
  2. Require Transparent Reporting: Ensure that all service providers offer clear, detailed reporting on fees. This includes breaking down the fees for recordkeeping, advisory services, and investment management.
  3. Engage Independent Experts: Consider hiring independent consultants to review fee structures and provide unbiased recommendations. This can help uncover hidden fees and negotiate better terms with service providers.
  4. Educate Committee Members: Continuous education on fee structures and industry trends is crucial for all committee members. This ensures they are equipped to make informed decisions that benefit plan participants.
  5. Communicate with Participants: Transparency should extend to plan participants. Clearly communicating the fees they are paying and the value they receive in return builds trust and helps participants understand the importance of fee management.


Understanding and managing 401(k) plan fees is a critical responsibility for plan committees. By maintaining a clear, comprehensive view of all associated costs, committees can safeguard participants’ retirement savings and uphold their fiduciary duty. In the end, diligent fee oversight not only enhances the financial health of the retirement plan but also fosters a culture of transparency and trust.

At Comperio Retirement Consulting, we are committed to helping plan committees navigate these complexities with confidence and expertise. Contact us today to learn how we can support your fee management efforts and enhance your 401(k) plan’s effectiveness.