According to the report, most 401(k) studies are based on publicly available data required to be filed by plans with 100 or more participants. But this means that data from approximately 533,000 401(k) plans that have fewer than 100 participants are excluded.
As a result, the report says, most studies could be overestimating the impact upon small businesses and their employees of broader industry trends such as the lowering of fees or greater access to low-cost index funds.
Looking at the asset-based fees charged to those smaller plans, America’s Best 401k concludes that many small business owners and their participants are overpaying for their 401(k) plans.
An industry report at the end of 2016 cites a median cost for plans with 100 participants or more, and $1 million or more in assets, of just 0.93% of plan assets per year, with the rate dropping sharply as assets exceed $10 million and more to as low as 0.27% of plan assets per year.