Human Resources

Lower Your 401(k) Plan Costs

July 29, 2010
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Increasingly, employers who provide their employees with a retirement plan are relying on 401(k) and similar defined contribution plans instead of defined benefit plans.

As a result, participants are paying more of the cost of managing their pension plans, which can take a substantial toll on their retirement savings, according to “Reducing Costs of 401(k) Plans with ETFs and Commingled Trusts,” by the Center for Retirement Research.

Over a 30-year career, for example, an annual fee of 0.7% of assets reduces the purchasing power of a participant’s balance at the time of retirement by more than one-eighth.

This report considers the potential savings sponsors can achieve in their 401(k) plans by reducing the “trading costs” embedded in the investment options that are often included in their plans.

Most of the money invested in equity within 401(k) plans is held in actively-managed mutual funds.

Although the investment objectives of these funds can offer more promising returns than the passive investment strategies of broad index funds, actively-managed funds can be costly.

Without giving up the investment objectives of actively-managed funds, 401(k) plans can achieve substantial savings by shifting to exchange-traded funds and commingled trusts.

Read the full report.

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory ( will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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