How Much Are 401(k) Fees? Averages, Hidden Costs, and How to Check

The typical 401(k) participant pays somewhere between 0.27% and 1.26% of their account balance in 401(k) fees each year, with the exact figure driven mostly by how large their employer’s plan is.¹ Those percentages sound small. Over a 30- or 40-year career, they aren’t. A one-percentage-point difference in annual costs can shave tens of thousands of dollars off your final balance, and federal law gives you the right to see exactly what you’re paying.

The Three Kinds of Fees Coming Out of Your Account

Every 401(k) charges fees in three categories. Knowing which is which makes the disclosures readable.

Investment Fees

Investment fees are usually the biggest slice. Each fund in your plan menu carries an expense ratio, an annual percentage deducted from the fund’s returns before you ever see them. Put $100,000 into a fund with a 0.59% expense ratio and roughly $590 a year comes out of your returns to pay the fund’s managers. You never write a check; the money simply reduces what your investments earn.

What you pay depends heavily on whether the fund is actively managed (analysts picking investments) or passively managed (tracking an index like the S&P 500). As of 2024, the asset-weighted average expense ratio for actively managed funds was 0.59%, while passive index funds averaged 0.11%.² Some funds also carry 12b-1 fees, ongoing charges taken from fund assets that pay for distribution and, in many plans, compensate the plan’s service providers behind the scenes.¹

Administrative Fees

Administrative fees pay for the day-to-day running of the plan: recordkeeping, accounting, legal compliance, customer service, and the technology tracking your contributions and balances. These are separate from anything embedded in your funds. Providers typically charge them as a flat per-participant fee (often $45 or more per person per year), a percentage of plan assets, or a combination. In many plans they come straight out of participant accounts rather than the employer’s budget.

Individual Service Fees

Individual service fees only hit you if you use a specific feature. Loan origination usually runs $50 to $100, plus possible ongoing loan maintenance of $25 to $50. Hardship withdrawals carry a processing charge. Dividing your account in a divorce under a Qualified Domestic Relations Order also triggers a fee.³ These charges come out of the individual participant’s account, not the plan as a whole.

What You’ll Pay Based on Plan Size

The single biggest factor in your total cost is how large your employer’s plan is. Big plans negotiate. Small plans absorb fixed costs across fewer people. Based on Morningstar’s analysis of BrightScope/ICI records, all-in costs run roughly:

Under $1 million in plan assets: about 1.26% annually
$1 million to $10 million: about 1.01%
$10 million to $50 million: about 0.74%
$50 million to $100 million: about 0.58%
$100 million to $250 million: about 0.44%
$250 million to $500 million: about 0.40%
$500 million to $1 billion: about 0.37%
Over $1 billion: about 0.27%

In dollars: an $80,000 balance in a small plan at 1.26% loses about $1,008 a year to fees. The same balance in a Fortune 500 plan at 0.30% costs about $240. Larger plans also tend to offer institutional share classes of mutual funds, which carry lower expense ratios than the retail versions individual investors see.¹

Why a Small Percentage Turns Into Real Money

The reason 401(k) fees matter so much isn’t the annual bite. It’s compounding. Every dollar taken out in fees stops earning returns for you, forever.

The Department of Labor’s own example makes the math concrete. Start with $25,000, add 35 years, assume 7% average annual returns, and stop contributing. If fees reduce your returns by 0.5%, the balance grows to $227,000. If fees are 1.5% instead, it grows to only $163,000, a 28% reduction from a single percentage point of extra cost.¹ A $64,000 gap, purely from fees.

Younger workers take the biggest hit. A 25-year-old paying 1% more than necessary loses far more over a 40-year career than a 50-year-old paying the same excess for 15 years.

How to Find Your Actual Fees

You don’t have to guess. Federal regulations require your plan administrator to give you a detailed fee disclosure at least once a year and quarterly statements showing the actual dollar amounts charged to your account.⁴ This document, often called the 404(a)-5 participant fee disclosure, usually shows up in your plan’s online portal or arrives from HR.

The annual disclosure includes a comparative chart listing every investment option in your plan alongside its expense ratio. Look for the column labeled “Total Annual Operating Expenses.” That’s the ongoing annual cost of each fund as a percentage of what you have in it. The disclosure also spells out any flat-dollar administrative fees or percentage-based charges deducted from your balance for plan maintenance.

The quarterly statement matters just as much. It shows the exact dollar amount pulled from your account for administrative services and any individual service fees during the prior three months.⁴ Check both together. Reading only your balance and skipping the fee statements is the most common way people miss what they’re actually paying.

Revenue Sharing and Why the Numbers Don’t Always Add Up

One cost mechanism often goes unnoticed: revenue sharing. In many plans, fund companies pay part of their expense ratios back to the plan’s recordkeeper. Part of what you pay through your funds is quietly redirected to cover administrative costs. If your plan also charges a separate administrative fee on top, you’re effectively paying for recordkeeping twice.¹

Revenue sharing shows up most often in bundled arrangements, where a single provider handles both investments and recordkeeping for a combined fee. The arrangement is legal and disclosed in plan documents, but it can make one fund’s higher expense ratio partly a reflection of revenue-sharing payments rather than better management.

What to Do If Your Fees Look High

If your total costs are noticeably above the averages for your plan’s size, you have options.

Switch to lower-cost funds inside the plan. Even in an expensive plan, you can usually cut your own investment costs by moving into index funds or lower-fee target-date funds. The gap between an actively managed fund at 0.59% and an index fund at 0.11% is enormous over decades.

Raise it with your employer. The Department of Labor recommends that participants contact the plan administrator with fee questions and tell their employer if the plan carries high-cost retail funds or features they don’t use.⁵ Employers have a legal duty to monitor fees, and participant feedback can prompt a benchmarking review. Many employers don’t realize their costs have drifted above market until someone points it out.

Roll over to an IRA after leaving. Once you separate from your employer, you can generally roll your balance into an IRA without taxes or penalties.⁶ IRAs typically offer a much wider set of low-cost funds and ETFs than most 401(k) plans. Former employees who stay in an old plan sometimes pay higher fees than current employees do. Rolling over while still employed is generally not allowed before age 59½ unless your plan specifically permits in-service withdrawals.

Keep contributing anyway. Even a high-fee plan is almost always worth using if your employer matches. A 50% or 100% match dwarfs a 1% annual fee, and the tax advantages of a 401(k) offset more of the drag. Skipping the plan because of fees is nearly always the wrong call.

One note on who pays what: investment fees are always borne by you, because they come straight out of the fund’s returns. Administrative fees may be paid by your employer, split, or passed entirely to participants. Individual service fees come out of the account of the person who used the service.

When the Employer Won’t Act

Your employer is a fiduciary under federal law. ERISA requires plan fiduciaries to act with the care of a prudent person, solely in the interest of participants and beneficiaries, and only to provide benefits and cover reasonable plan expenses.⁷ They must periodically review fees and consider changing providers if costs are out of line.

If your fees look unreasonable and your employer won’t engage, you can file a complaint with the Department of Labor’s Employee Benefits Security Administration through its online intake form. Every complaint is reviewed; if EBSA finds it valid, the agency first attempts informal resolution and may then refer the matter to enforcement staff.⁸ Excessive-fee lawsuits have also become common at large employers, and the pressure from those cases has pushed fees down across the industry, even at companies that were never sued.

1
U.S. Department of Labor. A Look at 401(k) Plan Fees
2
Morningstar. How Fund Fees Are Evolving in the US
3
Internal Revenue Service. Retirement Topics – QDRO – Qualified Domestic Relations Order
4
eCFR. 29 CFR 2550.404a-5 – Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans
5
U.S. Department of Labor. A Look at 401(k) Plan Fees
6
Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules
7
Office of the Law Revision Counsel. 29 U.S. Code 1104 – Fiduciary Duties
8
Employee Benefits Security Administration. Request Assistance from a Benefits Advisor – Ask EBSA