401(k) Fees: What’s Reasonable? A CFO’s Guide to Benchmarking Costs in Mid-Market and Large Companies

Key Takeaways for CFOs

• • • Reasonable 401(k) fees depend on both cost and service value.
    • Fee benchmarking supports fiduciary responsibilities and stronger governance.
    • Growing plans often create opportunities to negotiate for lower costs.
    • Hidden expenses, including revenue-sharing arrangements and embedded fees, can affect total plan cost.
    • Organizations benefit most from a consistent and documented review process.

One of the most common questions finance leaders ask is simple: What is a reasonable 401(k) fee? The answer depends on several factors, including plan size, service model, participant demographics and investment structure. No single fee benchmark applies to every organization.

CFOs should focus less on finding a universal target and more on understanding whether their organization receives appropriate value for the fees it pays. In our experience working with retirement plan sponsors, companies that benchmark fees regularly and review plan structures proactively often strengthen fiduciary oversight, improve participant outcomes and uncover meaningful cost savings over time.

Why Should CFOs Benchmark 401(k) Fees?

CFOs should benchmark 401(k) fees because fee oversight supports financial performance, fiduciary responsibility and employee experience.

The Department of Labor (DOL) requires plan sponsors to ensure that plans pay reasonable fees relative to the services they receive. The DOL does not require plan sponsors to select the lowest-cost provider. Instead, it expects employers to demonstrate a prudent process and evaluate whether services justify costs.

Regular benchmarking helps organizations:

• • • Control plan costs: Excessive fees reduce participant balances over time and can increase overall plan expenses.
    • Reduce fiduciary risk: Organizations that fail to monitor fees may increase exposure to regulatory scrutiny and litigation.
    • Support recruiting and retention: Employees increasingly evaluate retirement benefits as part of total compensation.
    • Strengthen governance: A documented fee review process demonstrates thoughtful oversight and sound decision-making.

Lower fees alone do not create a stronger retirement plan. Organizations should evaluate cost and service quality together.

What Do Reasonable 401(k) Fees Look Like Today?

Most organizations see fee structures vary based on plan assets, participant counts and service complexity.

As a general benchmark:

• • • Mid-market plans ($10 million – $100 million in assets): frequently fall in the ~0.30% – 0.75% range for all-in plan costs
    • Large plans ($100 million and above): often achieve ~0.20% – 0.50%

These ranges provide useful context, but they should not function as hard targets. Two organizations with similar plan sizes may pay different fees because they prioritize different services, investment options or participant support strategies.

CFOs should ask a more valuable question: Are we paying a reasonable amount for the services and outcomes we receive?

Where Do 401(k) Costs Originate?

CFOs should evaluate total plan costs rather than focusing on a single number. Most expenses fall into three primary categories:

Recordkeeping and administration

Recordkeeping costs often include:

• • • Technology platforms
    • Payroll integration
    • Compliance testing
    • Participant reporting
    • Administrative support

Providers often charge these fees through a per-participant model or as a percentage of plan assets.

Investment management fees

Investment expenses are typically embedded within fund expense ratios and represent one of the most significant drivers of total plan cost. These fees can vary widely depending on the investment approach and structure:

• • • Institutional index funds: often below 0.05%
    • Actively managed funds: can exceed 1.00%, particularly in retail share classes

Because these costs are built into investment options, they can be easy to overlook—but they have a direct impact on participant outcomes.

Plan fiduciaries should periodically review the investment lineup to ensure funds are using the most efficient share class available. As plan assets grow, many investors gain access to lower-cost institutional or collective investment trust (CIT) structures, which can meaningfully reduce expenses without changing the underlying strategy.

It is also important to understand how revenue sharing factors into investment costs. Some funds include additional fees that are used to offset recordkeeping or administrative expenses. While this can simplify how costs are paid, it may also obscure the true cost of investments and create uneven fee allocation across participants.

Advisory and consulting services

Advisory fees may cover:

• • • Fiduciary support and training
    • Investment monitoring
    • Governance protocol
    • Fee benchmarking
    • Participant advice and education
    • Strategic plan design
    • Vendor management

Organizations should align advisory services with plan goals and internal capabilities.

How Can CFOs Reduce or Better Manage 401(k) Fees?

Organizations that conduct regular reviews often identify opportunities to improve plan efficiency and reduce unnecessary costs.

CFOs should consider these strategies:

• • • Benchmark fees against peer organizations with similar characteristics.
    • Renegotiate pricing as plan assets grow.
    • Review investment menus or higher-cost options.
    • Evaluate whether bundled provider arrangements still make sense.
    • Engage an independent advisor to increase transparency.

Many organizations conduct fee benchmarking every two to three years. Significant asset growth, acquisitions or provider changes may justify more frequent reviews.

Helping You Get There…

Managing retirement plan expenses requires more than reducing fees. CFOs must balance cost efficiency, participant outcomes and fiduciary obligations. If your organization has not reviewed its retirement plan costs recently, Boulay can help you evaluate your plan structure, benchmark fees and identify opportunities that align with your broader business objectives.