The Employee Retirement Income Security Act holds fiduciaries of 401(k) plans responsible for protecting plan assets.
To fulfill that requirement, fiduciaries must ensure that plan expenses, including investment-related expenses, are reasonable in light of the services provided.
Typically, investment expenses make up a lions share of a plans fees. Plan providers often cover the cost of the expenses by deducting a percentage of plan assets directly from the plan investment options.
Plan providers often collect investment-based fees by deducting the fees from funds net asset values, rather than by allocating charges to individual participants accounts. Investment-based pricing can reduce the anxiety of inexperienced investors who are suspicious even of bargain-basement fees.
Unfortunately, in some cases, retirement plan providers may not give fiduciaries much more detail than they give employees.