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Are your 401k plan fees market competitive? Do you meet your fiduciary obligations regarding provider fee reviews and follow fees best practices?

Fees Best Practices


  • The providers generating fees for your 401k plan include (at a minimum): the plan’s investment advisor, recordkeeper, trustee, and custodian. Ensure their fees are reasonable by performing an annual review.
  • In partnership with your recordkeeper, make sure all required fee notices are shared with plan participants.
  • Try to select mutual fund options that do not pay soft-dollar revenue.
  • The most important of all fees best practices is to always use the lowest cost mutual fund share class. There has been significant litigation against plan sponsors who have not done this.
  • Review the cost and performance of all investments at least annually. Place documentation as evidence of your review in your plan files.

And You Should Also Consider…


  • Lowest cost not required. You are not required by any law or regulation to pay the lowest fees for any provider service. However, the fees you pay must be reasonable. If you wish to contract with a higher cost provider because you believe you will receive better service, you are free to do that.
  • Provider fees have plummeted. Fees have fallen significantly since the Department of Labor decided to make fee review an issue. If you haven’t checked the pricing on the services you receive from your plan providers within the last three years, do so this year.
  • Look at your investment menu. Since provider fees have fallen drastically during the last few years, most have cut their fees as much as they can. For many plan sponsors, any additional, meaningful fee reduction will come from the investment menu. Focus on ensuring that your investment fund line-up is the most cost efficient possible. For example, make sure you are offering a set of index fund options and you are using collective investment trust funds where appropriate.
  • Balance fee considerations. We are at the end of what has been a fee frenzy in the retirement plan business. Make sure that cost isn’t the only driver when you discuss your 401k plan. The plan participant experience should be at the center of all your decisions regarding your retirement plan.

Address any fee issues in your plan this year by implementing these fees best practices!


About the Author

Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton has over 30 years of retirement plan consulting and administration experience and has provided consulting services to many Fortune 500 companies including: Aon Hewitt, Apple Inc., AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Car Company, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs and many others. Mr. Lawton may be contacted at (414) 828-4015 or bob@lawtonrpc.com.

About Lawton Retirement Plan Consultants, LLC

Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Advisory (RIA) firm providing investment advisory, fiduciary compliance, employee education, vendor management and plan design services to 401(k) plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or bob@lawtonrpc.com or visit the firm’s website at: http://www.lawtonrpc.com. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.