Vanguard launched a small business 401(k) plan service in September that provides a low-cost plan, including index funds and target-date funds, in a bundled retirement plan package. The service is provided directly to sponsors of 401(k) and profit-sharing plans with assets up to $20 million, as well as to advisors who sell fee-based 401(k) plans.
The plan fees, comprising total investment, record-keeping, and administration costs, are anticipated to be among the lowest in the small-plans market, the company said in a statement. Research on 401(k) plan fees done by the Investment Company Institute and Deloitte Consulting shows that industry median all-in fees are 1.27% of plan assets for plans between $1 million and $10 million in assets.
The new Vanguard service all-in fee for a hypothetical plan with $5 million in assets, an average account balance of $50,000, and an investment lineup of Vanguard index and active funds was estimated at 0.32% of plan assets (actual pricing will depend on a plan’s investment options, demographics, and ancillary services).