How much are 401(K) plan fees?

1 min readLast updated December 5, 2023by Rachel Carey

Take a closer look at the average 401(k) fees, find out about types of 401(k) plans, and learn about the difference between 401(k) and IRA.


  • Average 401(k) fees include expense ratios, sales loads, and additional costs. 

  • 401(k) fees can range between 0.2% and 5% of your assets. 

  • Traditional 401(k) contributions are made pre-tax. 

  • Roth 401(k) contributions are made after tax. 

What are 401(k) fees? 

401(k) plans take their name from a section of the US Internal Revenue Code. With one of these plans, your employer will match all or part of your contribution paid into the investment account.  

A 401(k) plan can benefit you in various ways, such as by offering a stable income later in life or attractive tax benefits.  

Of course, there are costs incurred in setting up, managing, meeting compliance requirements, and reporting on your retirement plan, reflected in average 401(k) fees. These fees can be broken down into expense ratios, sales loads, and additional costs. You or your employer must cover those costs. However, exactly what those costs are isn’t always clear, as some of those fees are taken automatically from your retirement account. 

What are the average 401K fees? 

Some participants pay an average 401(k) fee of 2.22% of their assets. However, most 401(k) participants’ fees range between 0.2% and 5%. Raising your fees by a fraction of a percentage point could result in you losing tens of thousands of dollars in total return from your retirement plan.  

The size of your employer’s plan, your employer’s history, and the number of participants in your employer’s plan determine the size of the associated fees. Your 401(k) fees also indicate how actively your plan’s funds are managed.  

In addition to the fees mentioned above, you might be charged directly for advisory services, recordkeeping, and more. Some of these fees include: 

  • Individual transaction fees: These fees usually apply to certain features your employer added to the 401(k) plan and are typically charged to employees. 

  • Recordkeeping fees: You might be charged ongoing monthly or annual 401(k) plan fees ranging between $45 and $80 for account administration. 

  • Investment costs: There are fees associated with 401(k) plan’s investment vehicles such as mutual funds – an account holder in a plan with 25 participants and $250,000 in assets could expect fees of 0.43% of their plan assets for a $43 total (based on $10,000 average account balance). 

  • Investment advisory services: These fees (maximum annual fee around 0.50%, provider dependent) are associated with the cost of managing investment fund assets. 

  • Revenue sharing fees: These fees, based on the size of the total assets in the plan, are to compensate the service provider for investment-related services such as tracking fund ownership for plan participants.  

Why would you need a 401(k) plan?  

There are a few good reasons to consider contributing to a 401(k) plan. With one of these plans, you can save for retirement without the need to make a large contribution upfront, and your employer will match all or part of your contributions. You could also make potential tax savings, as you won’t need to pay tax on contributions and investment earnings until you withdraw them. 

However, there are a few disadvantages to these plans, such as high 401(k) plan fees, limited flexibility in investment options, and 10% for withdrawals made before age 59½. 

What are the different types of 401(k)s? 

There are a few different types of 401(k) plans. The two main types of plans are traditional 401(k) plans and Roth 401(k) plans. Let’s take a closer look. 401(k) fees are charged for both of them. 

Traditional 401(k) 

A traditional 401(k) plan sees your contributions as an employee deducted from your gross income. This means your contributions are made before income tax deductions.  

Your taxable income will be reduced by the total amount of contributions you make in a year, and you can report them as a tax deduction for that year. You do not need to pay taxes on your contributions or investment earnings until you withdraw the money.  

For example, if you contribute $400 from your $2,000 monthly gross paycheck to a 401(k) that month, your taxable income will be $1,600. If your employer matches your full contribution, they will also contribute $400 to your plan. 

Roth 401(k) 

A Roth 401(k) plan sees your contributions as an employee deducted from your income after income tax. This means that you will not receive a tax deduction in the year you contributed. However, you do not need to pay taxes when you make withdrawals after you retire. Early withdrawals can have tax consequences. 

For example, you contribute $10,000 from your $100,000 annual income (effective tax rate of 40%) to your Roth 401(k) plan. Withdrawing $60,000 from your account after retiring will put you into a 25% tax bracket. However, as you’ve already paid 40% taxes on the full $100,000 for a tax bill of $40,000 in the year of contribution, you will not pay any tax on the $60,000 you withdraw. 

The biggest difference between a traditional 401(k) plan and a Roth 401(k) plan is when taxes are applied. Traditional 401(k) plan contributions are made before tax, and Roth 401(k) plan contributions are made after tax.  

What is the difference between a 401(k) and an IRA? 

If you’re looking at options for investing for your retirement, you might be wondering what the difference between a 401(k) and an IRA is. The table below offers an overview of key differences, such as an IRA and 401(k) fee comparison. 

Offered through employers Opened by individuals through a bank or broker
Fewer investment options Range of investment options
Higher annual contributions allowed Lower annual contributions
You contribute a percentage of your salary; employers match all or part of those contributions No matching contributions from your employer
0.85% of assets median annual fee As low as 0.20-0.36% or none

Need advice on your 401k plan? 

A 401(k) plan can go a long way to helping you retire with the peace of mind that comes with knowing you can support your desired lifestyle. However, as much as there are advantages to these plans, there also are drawbacks, such as 401(k) plan fees.  

An SEC-regulated financial advisor can help you gain a better understanding of how a 401(k) plan and other retirement investment options can work for you. They can also create a financial plan that incorporates your 401(k) plan effectively. Simply answer a few questions and let Unbiased match you with the best financial advisor for your needs. Get matched with an advisor here. 

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.