Employee Fiduciary Releases Small Business 401k Fee Study
Employee Fiduciary President and CEO,
The data for the study was collected from Employee Fiduciary's fee comparison service, which launched in 2014. Since launching the service, the company has accumulated a large database of 401k fees. When the service is requested, Employee Fiduciary provides a report that totals all of the compensation a 401k pays plan service providers and fund companies into a single 'all-in' fee. This report is based on the following information, which is supplied by the 401k fiduciary:
- ERISA 408b-2 fee disclosure
- Current fund-line-up with balances
- Participant count
A copy of the study can be found here. Findings of the study include:
- Generally, brand name insurance and payroll company 401k providers are the most expensive, while lesser-known, 'open architecture' providers are the least expensive.
- The lower the asset-based fees a provider charges, the better. Fixed rate asset-based fees can drastically increase plan expenses as assets grow.
- Nearly all of the insurance company 401k plans use variable annuities in their fund lineup. Variable annuities are basically mutual funds wrapped in a thin layer of insurance with additional fees and redemption restrictions. A 'wrap' fee can be 1% or more, turning low cost mutual funds into costly variable annuities.
"We believe that we have the largest small business 401k fee study to ever be released to the public," said Droblyen. "We are releasing the data in hopes that our key findings will help plan sponsors avoid the consequences for buying an over-priced 401k plan and negatively impacting participant retirement savings goals."
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Read the full story at http://www.prweb.com/releases/2016/401kfeestudy/prweb13634753.htm
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