The Investment Company Institute (ICI) just confirmed what many of us have seen on the ground: 401(k) mutual fund fees keep dropping, and that\u2019s great news for plan participants.<\/p>\n
According to ICI\u2019s 2024 report, average equity mutual fund expense ratios in 401(k) plans have fallen 66% since 2000\u2014from 0.76% to just 0.26%. Bond and hybrid fund fees dropped, too. Even target-date mutual fund fees fell 57% over the last 16 years, now averaging 0.29%.<\/p>\n
What\u2019s driving this? A few things:<\/p>\n
\u00b7 Fierce competition among fund providers;<\/p>\n
\u00b7 Plan sponsors who know what they\u2019re doing and opt for low-cost share classes;<\/p>\n
\u00b7 Economies of scale;<\/p>\n
\u00b7 And participants who are (finally) paying attention to fees.<\/p>\n
Bottom line: The 401(k) market works when it\u2019s built right. Lower costs mean more savings stay in participants\u2019 pockets, and this trend shows no sign of stopping.<\/p>\n
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