Dollars & Sense

Average 401(k) retirement account fees decline

Updated: 2013-06-12T18:01:26Z

Bloomberg News

Average fees paid by mutual-fund investors in 401(k) retirement savings plans declined last year, according to the Investment Company Institute.

Costs for investing in equity funds offered in 401(k)s averaged 63 basis points in 2012, down from 65 basis points for the prior year, the Washington-based trade group said today. The average bond-fund expense ratio dropped to 50 basis points compared with 52 basis points in 2011, ICI said. A basis point is equivalent to 0.01 percentage point.

The proliferation of lower-fee products and more cost- conscious plan sponsors have contributed to the trend of declining expenses for funds in 401(k)s over the past 15 years, ICI data show. Mutual funds account for 60 percent of the assets in 401(k) plans, which held $3.6 trillion the end of 2012, according to the ICI.

The U.S. Department of Labor has been pushing for more cost transparency in employer-sponsored retirement plans such as 401(k)s. It enacted rules last year requiring detailed disclosure of 401(k) expenses to workers and employers including those for investment management, custody and administration.

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