The Forgotten 401(k)

Many business owners and CEOs see the value of a 401(k) not only for themselves, but their employees. What once was a well thought out benefit, often becomes a forgotten cost burden. If an experienced advisor is not monitoring a 401(k), the business owner may be left with a 401(k) with high administration fees, high expense funds, along with inappropriate compliance – leaving the business open to risk of a lawsuit or DOL penalties.

Administrative Fees

401(k) administrative fees are the costs associated with keeping track of individual account values, crediting contributions, and sending out quarterly reports – among other things. The administrative costs used to be significant – often pricing out many small businesses. However, there has been a dramatic change due to technology in the administrative costs associated with a 401(k). Many businesses are paying twice what they should. This In turn, costs the business money. An independent advisor has the freedom to shop administrative costs and recommend the best fit, lowest cost option for a business.

Mutual Fund Fees

All mutual funds have a hidden internal fee called an expense ratio. Fund expense ratios can range from .10% up to 2.00%. A high expense ratio eats away at the return of the investor. Hence, a 401(k) with high expense ratios may not have reasonable expenses from a compliance standpoint. In addition, the high costs of the funds eat away at the returns, and ultimately the accumulation, of the 401(k) investors.


A business that offers a 401(k) has a fiduciary responsibility to act in the best interest of employees participating in the 401(k). Failure to act in a fiduciary capacity can subject the business to litigation (often from a disgruntled employee) or discipline from the Department of Labor. A compliance program that includes ongoing employee education and an Investment Policy Statement are critical to maintaining appropriate 401(k) compliance.

Taking the time to review a 401(k) has the potential to save money for the business, 401(k) participants, and mitigate risks associated with offering a retirement plan.

Kevin McNab

This article is written by Kevin J. McNab. Kevin is President of ACE Wealth Partners, LLC and is a CFP®, ChFC®, and CRPC®. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by ACE Wealth Partners, LLC unless a client service agreement is in place. If you have any questions regarding this Blog Post, please Contact Us. Please read our website DISCLOSURE carefully for additional information.