Most 401(k) Plans Saw Costs Continue to Drop

Total 401(k) plan costs declined across plan sizes, though the smallest plans saw only modest reductions, according to the 26th edition of the “401(k) Averages Book,” released Monday. The independent benchmarking book, which focuses exclusively on 401(k) plan cost data, found that investment fees and average adviser compensation also fell in the preceding year.

The “401(k) Averages Book” publishes scenarios in which hypothetical plans of 50 people have varying average account sizes. The latest edition found that smaller plans consistently pay more than larger plans. A $5 million plan averaged 1.04% in total plan costs, while a $50 million plan was only charged an average of 0.72%.

A 50-participant plan with $5 million in assets—$100,000 per participant—would have paid 0.96% in plan costs in 2025, down from 1% in 2024. The 2025 costs break down to 0.78% for investment fees and 0.18% for recordkeeping administration.

A similar plan with $2.5 million in assets—$50,000 per participant—would have paid 1.17% in 2025, down from 1.21% in 2024. The 2025 costs break down to 0.88% for investment fees and 0.29% for recordkeeping administration.

If the plan had $500,000 in assets—$10,000 per participant—costs would have been 2.3% in 2025, down from 2.32% in 2024. The 2025 costs break down to 1.15% for investment fees and 1.15% for recordkeeping administration.

International equities were the costliest investment asset for all three plan sizes—1.36% for small plans, 1.1% for medium and 0.99% for large. Stable assets were the least expensive asset class—1.01% for small plans, 0.73% for medium and 0.63% for large.

PLANSPONSOR’s 2025 Defined Contribution Survey, which incorporated responses from 4,387 plan sponsors from a wide variety of U.S. industries, found that on average, 42.8% of respondents spent less than 0.25% on average asset-weighted expense ratios on investment options. Another 37.5% spent between 0.25% and 0.50%; 12.6% of respondents spent between 0.5% and 0.75%; 4.1% spent between 0.75% and 1%; and only 3% spent more than 1%.

“Fiduciaries have a responsibility to understand and evaluate all components of plan fees, not just investment costs, but recordkeeping and adviser compensation as well,” Valletta added in a statement. “Benchmarking is one of the most effective tools available to support that process.” The latest “401(k) Averages Book” includes 24 representative scenarios based on data from plans with between 10 and 2,000 participants. The guidebook is intended for fiduciaries, advisers and service providers to benchmark fees, support governance processes and inform plan decisionmaking.