401(k) provider fees: what will the business and employees pay?

One benefit can have several bills

The Department of Labor separates plan administration, investment and individual-service fees. Administration may be paid by the employer or charged to plan assets. Investment expenses can reduce investment returns without appearing on the company’s invoice.

For the buyer, that means two questions: what does the company pay, and what comes out of employees’ accounts? Moving a charge between them changes who pays; it does not make the service cheaper.

Thirty people saving does not necessarily mean thirty people billed

Employee Fiduciary publishes a $1,500 annual base fee covering 30 eligible employees, then $30 annually for each additional eligible employee. The word eligible matters.

For a fictional workforce with 50 eligible employees but only 30 contributing, that formula produces a $2,100 annual base fee: $1,500 plus 20 × $30. Counting only contributors would understate this component by $600.

Use the supplier’s billing definition when building your budget. Do not assume it matches active contributors, total payroll headcount or the number of people logging in.

The same headcount can produce a different bill as assets grow

Employee Fiduciary also lists an annual custody charge of 0.08% of plan assets. Here is the arithmetic for the same 50 eligible employees, assuming the stated asset balance remains constant for a full year.

This excludes setup, investment expenses, any separately charged advice and other applicable services. It does not establish who pays each component or predict investment performance.

Recalculate asset-based fees as plan balances grow, even if employee headcount stays the same.

A higher fee can be worthwhile when HR needs the service

Human Interest publishes different administrative packages. Essentials lists $80 plus $5 per eligible employee monthly; Complete lists $180 plus $7. At 50 eligible employees, those employer-fee components are $330 and $530 a month respectively.

Complete lists additional services including Form 5500 signing and filing, an ERISA fidelity bond and loan and distribution approval. That is a concrete reason for a stretched team to evaluate the higher tier.

Employees also pay asset-based fees. Human Interest’s published example charges 0.01% monthly for advice and 0.05% for recordkeeping.

At 0.06% monthly, a constant $500,000 balance would cost $3,600 across twelve months, before fund expenses. The advisory fee is higher under its 3(21) service; use the quoted arrangement.

The $200 monthly difference is not a comparison of total plan cost. Human Interest also discloses asset-based fees, and investment expenses need considering separately. Compare the exact service and fee schedule before treating either headline as all-in.

Use these examples to compare employee-based and asset-based fees, then identify which administration tasks each quote includes. They do not establish an overall winner or equivalent service.

Choose the proposal you can explain to both Finance and employees

Make a simple recommendation: the business pays this much, employees bear these charges, and the provider performs these jobs. If you cannot fill in one part, the comparison is incomplete.

Choose the lower-cost suitable service when you already have the capacity to operate the plan. Consider a broader service when recurring administration is the gap. Keep employer contributions separate from provider fees: they serve a different purpose in the benefits budget.

For the next buying conversation, use your real eligible headcount and current plan assets. Match the payroll connection to the payroll system you actually run. Our US payroll shortlist helps if that system is also changing.

Questions buyers ask