Nearly One in Three Small 401(k) Plans Pay Over Double the Median Administrative Cost, Study Finds

An analysis of 48,944 plan year 2024 Form 5500 filings finds roughly 10,500 plans under 500 participants paying above $324 per person.

CORPUS CHRISTI, TX, UNITED STATES, September 14, 2026 /EINPresswire.com/ -- A new analysis of 48,944 401(k) plans finds that smaller employers are paying a sharp premium to administer their retirement plans, and that nearly one in three small and mid-sized plans pays more than double the national median cost per participant.

The study, conducted by Admin316, an independent retirement plan fiduciary serving employer-sponsored plans nationwide, is based on plan year 2024 Form 5500 filings submitted to the U.S. Department of Labor. It covers every 401(k) plan in the filing data with 25 or more active participants that reported both administrative expenses and end-of-year assets. The figures are drawn from public federal filings signed under penalty of perjury, not from survey responses.

Across the 48,944 plans analyzed, the median plan paid $162 per participant per year in administrative expenses, or 27.0 basis points of plan assets. That national figure conceals a wide gap by plan size.

Key findings:

- Plans with 25 to 99 active participants paid a median of $364 per participant per year. Plans with 500 or more active participants paid a median of $104 — roughly three and a half times less per person.
- The gap holds when measured against plan assets, where the fixed-cost explanation does not apply. The smallest group paid a median of 32.5 basis points against 18.6 basis points for the largest, meaning smaller plans pay more per participant and more relative to assets at the same time.
- Among the 34,423 plans with fewer than 500 active participants, 30.6% paid more than twice the national median per participant — approximately 10,500 plans paying above $324 per person.
- At the 90th percentile of the 25-to-99 participant group, administrative cost reached $977 per participant. For a 70-person plan, that is roughly $68,000 a year.
- Fewer than half the plans analyzed reported a contract administrator fee (45%) and just over half reported recordkeeping fees (56%), indicating that a substantial share of plan compensation is paid indirectly, through investment expenses and revenue sharing, rather than billed to the employer.

"A higher number is not proof that a plan is overpriced, and ERISA does not require anyone to hire the cheapest provider," said Russell McNorton, Founder and CEO of Admin316, who has worked with retirement plans since 1997. "What ERISA does require is that the responsible fiduciary determine whether the compensation is reasonable. Paying $977 per participant is not a breach. Paying it without ever having compared it to anything is a much harder position to defend."

McNorton said the indirect-compensation finding is the one plan sponsors most often miss. "If nothing is billed to the company, the arrangement feels free. It isn't. It is being paid out of employees' retirement savings, in a form that never reaches the employer's accounts payable. The question is not whether an invoice arrived. The question is what the plan is paying in total, and who is receiving it."

The analysis carries a stated limitation. Schedule H, which contains the expense detail used in the study, is generally filed by larger Form 5500 filers, while the smallest plans may file Form 5500-SF, which does not require the same breakdown. The 25-to-99 participant category therefore represents small plans filing a full Schedule H rather than every small 401(k) plan in the United States. Reporting practices also vary between filers.

The findings are the first in a series of monthly data releases Admin316 will publish through 2026 and 2027, drawn from research for a forthcoming book by McNorton on employer fiduciary responsibility under ERISA, "Who Is Your Named Fiduciary?"

Journalists may request the methodology, the underlying figures by plan-size band, or comment on employer fiduciary duty, Form 5500 reporting, plan fee benchmarking and 3(16) administration at admin316.com/newsroom.

About Admin316

Admin316 is an independent retirement plan fiduciary based in Corpus Christi, Texas, serving employer-sponsored retirement plans nationwide. The firm accepts written appointment as ERISA Section 402(a) Named Fiduciary and Section 3(16) Plan Administrator, assuming administrative fiduciary responsibility that otherwise remains with the employer — including Form 5500 signature authority, participant notices, distribution and loan approvals, and compliance oversight. Admin316 works alongside a plan's existing advisor, recordkeeper and TPA rather than replacing them. More at admin316.com.

Media contact:
Russell McNorton, Founder & CEO
Admin316
rmcnorton@admin316.com
(361) 271-1211
admin316.com/newsroom

Russell McNorton
Admin316
+1 361-271-1211
rmcnorton@admin316.com
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