More than 70% of employers are concerned about the cost of their 401(k) plans, and 60% have reduced or are planning to reduce investment management fees in their plans, according to study by Hewitt Associates.
Some 401(k) providers bundle trustee and administration costs into investment management fees, making it difficult for employers to determine these various fees, according to Hewitt, which suggests that employers ask their provider to break these fees down.
"Investment management fees, otherwise known as fund expenses, are typically the largest portion of total plan cost," said Pamela Hess, a defined contribution consultant at Hewitt. "They are also the most manageable and predictable costs to reduce, as employers typically have a number of funds to select from that meet their 401(k) plan needs. Employers can make relatively small changes in this area that can make a big difference in an employees ultimate accumulated wealth."