Pure Benchmarks · Guide
401(k) Fee Benchmarking: How Employers Benchmark Plan Costs, and What It Means for You
Short answer
401(k) fee benchmarking compares what a plan pays for recordkeeping, administration, advice and investments with what similar plans pay. Employers do it because ERISA makes them fiduciaries who must make sure plan fees are reasonable, using the fee disclosures that service providers must give them under ERISA section 408(b)(2). Participants receive a separate annual fee disclosure under section 404(a)(5). Fee benchmarking tells you whether the plan’s price is competitive. It does not tell you how your own account has performed.
Searches for 401(k) fee benchmarking come from two directions. Plan sponsors want to know whether what their plan pays is defensible. Participants want to know whether the plan they are stuck in is expensive. Both groups are asking about the same numbers from different seats, and this page explains what gets compared, why employers are expected to compare it, where the figures come from, and what a participant can check without the employer’s report.
What fee benchmarking compares
A fee benchmark usually breaks the plan’s cost into recordkeeping and administration, charged per participant or as a percentage of assets, the expense ratios and share classes of the investment options, and any adviser or consultant fees. Each is compared with plans of similar size, participant count and asset level, because a plan with a few million dollars and one with several billion should not pay the same rate for the same service.
Why employers are expected to do it
ERISA requires plan fiduciaries to act prudently and to make sure the fees the plan pays are reasonable for the services received. The Supreme Court held in Tibble v. Edison International in 2015 that fiduciaries have a continuing duty to monitor plan investments, and in Hughes v. Northwestern University in 2022 that offering some low-cost options does not by itself excuse imprudent ones elsewhere in the lineup. Benchmarking is how a sponsor documents that it checked.
Where the numbers come from
Covered service providers must disclose their compensation to plan fiduciaries under ERISA section 408(b)(2), which gives the sponsor the plan’s own side of the comparison. Most plans also file an annual Form 5500 with the Department of Labor, which is publicly searchable and reports plan assets, participants and certain service provider fees. Benchmarking reports from recordkeepers, consultants and data providers supply the peer side.
What a fiduciary benchmarking report usually contains
A typical report places the plan’s total cost and its component fees against a peer group, compares each fund’s expense ratio with funds in the same category, and lists the services the plan receives for the price. The output is a judgment about whether the plan is paying a reasonable price, which the sponsor can use to renegotiate, change share classes or run a request for proposals.
What participants can check themselves
You do not need the employer’s report to see the main costs. The annual 404(a)(5) disclosure lists each investment option’s expense ratio and any plan administration fees charged to accounts, and the plan’s Form 5500 is public. Fees are only half of the question, though. A plan can be priced competitively while your own account trails investors taking the same risk. Pure Benchmarks, our own product, measures that second half from your linked account.
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See Your Free Benchmark ReportFrequently asked questions
What is 401(k) fee benchmarking?
It is a comparison of what a 401(k) plan pays for recordkeeping, administration, advice and investments with what similar plans pay, usually commissioned by the employer to confirm the plan’s fees are reasonable.
How often should a 401(k) plan be benchmarked?
There is no fixed legal schedule. ERISA expects fees to be reasonable and monitored on an ongoing basis, and many sponsors run a formal benchmark or request for proposals every few years with lighter reviews in between.
What is a fiduciary benchmarking report?
A report prepared for plan fiduciaries that compares the plan’s fees, investment expenses and services with a peer group of similar plans, giving the sponsor documented evidence that it reviewed whether the plan’s costs are reasonable.
Can I see what my 401(k) plan pays?
Partly. Your annual 404(a)(5) fee disclosure lists investment expense ratios and plan fees charged to your account, and most plans file a Form 5500 with the Department of Labor that anyone can search. The employer’s own benchmarking report is generally not shared with participants.
Is fee benchmarking the same as benchmarking my account?
No. Fee benchmarking measures the plan’s price against other plans. Account benchmarking measures how your own balance performed, with contributions removed, against investors taking similar risk. A low-cost plan does not guarantee a well-performing account.
Keep exploring
- What Is 401(k) Plan Benchmarking, and What Does It Mean for Me?
- 401(k) Benchmarking Tools in 2026
- How Do You Know If Your 401k Is Doing Well?
- How Does My 401(k) Compare to Other People’s?
- How Do You Know If Your Portfolio Changes Worked?
- Is Your Financial Advisor Doing a Good Job?
- How Much Social Security Will You Get?
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This page is an information baseline for comparison only. It is not investment advice and not a recommendation to buy, sell, replace, or transfer any specific asset, account, or firm. Past performance does not guarantee future results. All figures shown are illustrative.