401(k) plan fees are rarely a single number. They stack across recordkeeping, investment expense, and revenue sharing that flows quietly between providers. Reading the 408(b)(2) disclosure can show what you really pay and who gets paid, which is the first step toward fees a fiduciary can defend as reasonable.
Ask a plan sponsor what their plan costs and the honest answer is usually a guess. That is not carelessness. It is by design. 401(k) plan fees are bundled, netted out of returns, and split between parties in ways the paperwork rarely makes plain. The work here is simple to describe and harder to do: follow the money until you can see every party it touches.
Why the Number Is So Hard to Find
401(k) plan fees almost never arrive as one line. They stack across recordkeeping and administration, the expense ratio inside each fund, and revenue sharing that quietly flows from fund companies back to the recordkeeper. That last layer is where conflicts live, because it can reward a provider for keeping pricier funds on the menu. Reading the 408(b)(2) fee disclosure is how you pull those layers apart.
The provider-by-provider picture matters, and it connects back to the wider 401(k) advisory practice:
- What a recordkeeper actually does for its fee
- How fees show up in an Empower plan, and the conflicts that can ride along
- Why a provider with proprietary funds can face a sharper conflict
How Holland Capital Reads Your Fees
We start with the 408(b)(2) disclosure and rebuild it into plain numbers: this many dollars to recordkeeping, this much to funds, this much in revenue sharing, and here is who receives each. Then we test reasonableness against current market data and against what the same services cost in lower share classes. The aim, true to Preserve. Strengthen. Grow.™, is not to declare every provider a villain. It is to show you what you pay and who is paid, so the fees in your plan are ones a fiduciary can defend. Where a conflict is structural rather than cosmetic, that finding feeds straight into your oversight obligations.
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Are High Fees Always a Problem?
Not by themselves. A fee is a problem when it buys less than a comparable plan pays for, or when it is steered by a conflict rather than by value. Consider a hypothetical: a plan sits in a retail share class paying ongoing revenue sharing, while an institutional class of the same fund is available at a fraction of the cost. The dollars are not dramatic in any single year, but across a workforce and a decade of compounding they can add up. They might also be immaterial in a small plan. The only way to know is to read the actual disclosure.
Related Guides
Plan fees touch review, oversight, and the decision to switch. Start with the wider 401(k) advisory practice, then go deeper on the areas below.
- Benchmarking the plan overall
- Your fiduciary oversight duties
- What a recordkeeper does
- Fees in a Principal plan
- Conflicts in a Fidelity plan
Getting Started with Holland Capital Management
If you’re evaluating financial decisions in today’s market environment, request a Clarity Call to discuss our planning and investment approach.
Frequently Asked Questions
What Are the Main Types of 401(k) Plan Fees?
Three layers cover most of it: recordkeeping and administration, the expense ratio inside each fund, and revenue sharing that moves between providers. Advisory fees, where an advisor is engaged, are a fourth and usually the most visible.
What Is Revenue Sharing and Why Does It Matter?
Revenue sharing is money a fund company pays a recordkeeper out of a fund expense ratio. It can quietly reward a provider for keeping higher-cost funds on the menu, which is why it sits at the center of many fee conflicts.
How Do I Find Out What Our Plan Really Pays?
Start with the 408(b)(2) disclosure your provider must give you. Reading it carefully, and unbundling it into dollars by party, shows what you pay and who receives it. Our plan review guide walks through the full picture.
Does an Open-Architecture Provider Avoid These Conflicts?
It reduces one of them. A recordkeeper with no proprietary funds, such as an open-architecture provider, does not have a captive-fund conflict, though revenue sharing and sub-administration fees can still apply.
Are Lower Fees Always Better?
Lower is better only when the service holds. The goal is reasonable fees for real value, not the cheapest possible plan that leaves participants without support.
Who Is Responsible for Whether Fees Are Reasonable?
The plan fiduciary, usually the sponsor, carries the duty to ensure fees are reasonable for the services received and to document how that judgment was reached.
Can Reducing Fees Pay for an Advisor?
Sometimes. When a review uncovers lower share classes or repriced recordkeeping, the savings can offset or exceed an advisory fee, though this depends on what the plan pays today.
