If you provide 401(k) benefits for your employees, 401(k) management fees are likely something you deal with as a matter of course. If all is well, you may not see any reason to question the fees you are charged or considered how your rates measure up to the national average. If so, you may be missing out on an opportunity to reduce the fees you pay to manage your 401(k). SIB cost reduction consultants have deep experience working with 401(k) management providers, helping enterprise-level companies lower their 401(k) management fees and improve their ROI.
High 401(k) management fees can reduce your investment. That means less money for your employees at the end of a dedicated career, as well as an ongoing drain on your company’s resources. Understanding exactly what you are being charged for is the first step to solving this problem.
401(k) management fees fall into three primary categories:
Plan Administration Fees
Plan Administration Fees involve day-to-day administrative services and operating expenses for activities such as record keeping, trustee, accounting and legal services. In an individual plan, these fees may be deducted from the actual returns, but as an employer, they will generally be borne by you. If taken as a deduction from the plan’s assets, it doesn’t fall under any legally mandated fee disclosures, so the company is not required to inform you as to what they are. From a cost-reduction standpoint, the key is to ensure you are getting exactly what you’re paying for. For example, if your “administrative fees” include access to legal or financial advice that you are not using, then you are paying too much. By examining your contract and level of service, SIB can uncover leverage to renegotiate a better rate for your 401(k) management.
Investment fees make up the bulk of 401(k) management fees, and are generally assessed as a percentage of the assets invested. Mutual fund management, for example, can carry the highest expense and eat away at your investment over time. When it’s buried in the bigger prospectus, it may seem inconsequential, but it often adds up to a significant amount in the end. This ultimately comes out of the investment, and you may stand to lose a great deal of money if the problem is ignored. Through a comprehensive audit, SIB can uncover any hidden 401(k) fees and help make certain that you’re receiving the level of service you’re paying for, and that your rates are on par with national standards.
Individual Service Fees
Individual service fees may be charged for various optional features, including 401(k) loans. Other individual fees include termination charges, conversion charges, startup charges, and more.
On top of these three primary fees, there is the employer’s portion of the contribution, which is largely dependent on how many employees participate in the program. These fees can range anywhere from 0.5 percent for an enterprise-level company to 1.4 percent for a small business. Generally, the larger the “share class”—that is, the total investment—the lower the fees. However, there may still be ways for you to lower your overall fees while also putting more money into the pockets of you and your employees. Leveraging extensive experience and a database of benchmarked rates, SIB knows exactly which fees can be negotiated in order to pass along savings to you and financial security to your workforce.
SIB’s No-Risk Approach
With years of experience helping companies lower 401(k) management fees, we are confident that SIB can secure significant savings for you. If we are unable to lower your 401(k) management costs, you pay nothing. We can renegotiate your operating expenses, administrative fees, and investment advisor’s fees, and may even be able to eliminate them entirely. We will perform our audit without any disruption in your services. You won’t notice any difference at all – that is, until you look at your bottom line.
Contact SIB to reduce your 401(k) management fees and other expenses today.