The sponsor of a very small 401(k) plan could spend more than 6 times as much per employee on administration than the sponsor of a giant 401(k) plan would spend.[@@]
Joel Popkin, a researcher in Washington, has quantified the administrative burdens facing “baby groups” in a report on benefits costs released today by the U.S. Small Business Administration.
When Popkin reviewed administrative expense data from 1998 retirement plan tax forms, he found stark differences between the average annual per-employee administrative expense levels for large, midsize employers.
For an employer with more than 5,000 employees, the average annual per-employee administrative cost is $31 for defined contribution plans and $159 for defined benefit plans.
At midsize employers with 51 to 100 employees, the averages are $59 for defined contribution plans and $217 for defined benefit plans.