Final Report
Pension and Welfare Benefits Administration
STUDY OF 401(K) PLAN
FEES AND EXPENSES
Contract No. J-P-7-0046, Task Order 1
April 13, 1998
Submitted to:
Department of Labor
Pension and Welfare Benefits Administration
200 Constitution Avenue, NW, Room 5718
Washington, DC 20210
Submitted by:
Economic Systems, Inc.
5514 Alma Lane, Suite 400
Springfield, VA 22151
(703) 642-5225 Tel
(703) 642-5595 Fax
Table of Contents
SECTION
TITLE
I
INTRODUCTION AND BACKGROUND
1.1. Significance of 401(k) and Other Defined
Contribution Plans
II
CHARACTERISTICS OF 401(k) PLANS
2.1. Introduction
2.2. To What Extent are 401(k) Plans Used?
2.3. What Features are Found in Typical 401(k) Plans?
2.4. Types of 401(k) Plan Investments
2.5. 401(k) Plan Asset Holdings
2.6. How is the Administration of 401(k) Plans Structured?
2.7. How Are 401(k) Plan Services Delivered
III
401(k) PLAN FEES AND EXPENSE STRUCTURE
3.1. Introduction
3.2. Basis for Computing Fees
3.3. Typology of 401(k) Fees and Expenses
3.4. Approaches Used to Assess these Expenses
3.5. Issues Affecting Expenses
3.6. Who Pays 401(k) Administrative Fees and Expenses?
3.7. Are Plan Sponsors and Participants Adequately
Informed About Fees and Expenses
IV
COST ANALYSIS FINDINGS
4.1. Introduction
4.2. Components of Plan Expenses
4.3. Summary of Total Plan Expenses
4.4. Summary of Findings
V
SUMMARY AND CONCLUSIONS
5.1. Summary
5.2. Characteristics of 401(k) Industry
5.3. Conclusions about Current Issues
APPENDICES
TITLE
A
Bibliography
B
Sample Disclosure Forms
TABLES
TITLE
II-1 Employers Sponsoring Single-Employer Retirement Plans
II-2
Employers Sponsoring Single-Employer Retirement Plans
II-3
Distribution of Assets in 401(k) Plans
II-4
Typical Mutual Funds Categories
II-5
Major Categories of 401(k) Investment Options
III-1
Who Pays Plan Expenses
III-2
Plan Expenses Paid by Participants Only
III-3
Plan Expenses Paid by Participants Only
III-4
Future Payment of Administrative Fees Onl