If you’ve shopped around for 401(k) providers, then you have probably been comparing plans and evaluating fees. The harsh truth is that many 401(k) providers are either charging for fees that they shouldn’t, or they are simply overcharging.
Just about every provider charges fees, and they’re eating away at retirement funds. In fact, about 20% of individuals didn’t know that there are fees associated with their 401(k) plan. So what are these fees, and how much should you be paying?
Set Up Fee
Set up fees are exactly what they sound like, a fee to set up your 401(k) plan. While it can vary from provider to provider, the set up of a 401(k) may include a plan consultation and deciding which kind of plan best suits your employees, setting up an integration with your payroll company, and setting up the brokerage account.
Many other small business 401(k) providers will charge several hundred dollars for a setup fee, but we charge nothing.
A record-keeping and administration fee is usually charged to cover the fee associated with the facility that any provider uses to generate reports or anything related to recordkeeping activities. This fee is usually charged in the form of a percentage, with some providers charging more than 0.65% for this, while we charge a low fee of only 0.35%.
Per Participant/Employee Fee
You’ll find that most 401(k) providers charge a per participant, or per employee fee, which is pretty straightforward. They will charge you (the employer) a fee based on the number of eligible employees or participants in your plan. You can expect other providers to charge anywhere from a couple of dollars to a couple of hundred dollars per employee. We simply consider this an unnecessary fee, so… we don’t charge that fee!
Monthly fees are truly an unnecessary charge and create a burden on employers. We don’t believe you shouldn’t have to pay a fee just for simply having a 401(k) plan, so to rid this burden and make this opportunity more accessible, we don’t charge one. Unfortunately, other providers will charge upwards of $100 for this.
Average Fund Fee
Fund fees vary widely based on the investment options offered to participants. It’s a fee that is often unavoidable, but just because it is something that is unavoidable doesn’t mean it should be expensive. We keep fund fees at a minimum, which helps keep more of your money working for you.
Miscellaneous MGMT Fees
Miscellaneous management fees are all the other fees that don’t fall into the above categories. These fees can range from things such as custom reporting, loan fees, reporting requirements related to plan audits, and filing reports. While we do all of these for free, other providers will charge hourly fees.
Is your current provider charging you these fees? If so, then you’re probably losing thousands in fees. Don’t wait – switch over to SaveDay today and start saving freely!
Photo by Arlington Research on Unsplash