Pure Benchmarks · Guide
Vanguard 401k Fee Benchmarking Report: What Employers Use and What You Can Check
Short answer
A Vanguard 401k fee benchmarking report compares what a plan administered by Vanguard pays for recordkeeping, administration and investments with what similar plans pay. Employers build it from the fee disclosure Vanguard, as a covered service provider, must give them under ERISA section 408(b)(2), usually with a consultant or benchmarking service. Vanguard argues that comparing base per-participant recordkeeping fees alone can mislead and that a total cost of ownership view, adding ancillary fees and other revenue the provider receives, is more complete. As a participant you will not usually see the report, but your annual 404(a)(5) disclosure shows every fund’s fees as a percentage and per $1,000.
Searches for a Vanguard 401k fee benchmarking report usually come from one of two places: an employer whose plan is administered by Vanguard and who needs to document that its fees are reasonable, or an employee who wants to know whether their own 401(k) is expensive. The report itself is an employer document. This page explains how it is built, what Vanguard says about comparing recordkeeping fees, and how a participant can check fees with documents they already receive.
The documents behind 401(k) fee benchmarking
| Document | Who receives it | What it shows |
|---|---|---|
| 408(b)(2) service provider disclosure | The employer as plan fiduciary | Services provided and all direct and indirect compensation the provider receives |
| Fee benchmarking report | The employer or plan committee | Plan costs compared with similar plans by size and industry |
| 404(a)(5) participant fee disclosure | Every participant, annually | Each fund’s fees as a percentage and per $1,000, and its 1, 5 and 10-year returns beside a broad market index |
| Quarterly benefit statement | Every participant | Fees actually deducted from your account in dollars |
Disclosure requirements are from the US Department of Labor regulations under ERISA sections 408(b)(2) and 404(a)(5). Vanguard’s total cost of ownership approach is from its November 2024 commentary on recordkeeping fees. Pure Benchmarks is not affiliated with Vanguard.
Why employers benchmark 401(k) fees
An employer that sponsors a 401(k) acts as a fiduciary under ERISA and has to make sure the fees the plan pays are reasonable for the services received. Benchmarking against similar plans, by number of participants, assets and industry, is the common way to show that. A fee benchmarking report sets the plan’s recordkeeping, administrative, advisory and investment costs beside those comparisons, and committees usually repeat it every few years or before re-bidding the recordkeeper.
Where the numbers come from
Under ERISA section 408(b)(2), covered service providers such as recordkeepers must tell the plan fiduciary what services they provide and all the direct and indirect compensation they receive. For a plan administered by Vanguard, that disclosure is the starting point of any fee benchmark. Consultants, advisors and benchmarking services then compare it with their own databases of similar plans.
Vanguard’s total cost of ownership view
In a November 2024 commentary, Vanguard argued that comparing recordkeepers on base per-participant fees gives an incomplete picture, because a provider can quote a low base fee while earning more through ancillary fees and other revenue sources. Its total cost of ownership approach adds those together. For a fee benchmark, the practical point is to compare all-in costs across providers rather than the headline recordkeeping fee alone.
What you can check as a participant
You will rarely see the employer’s benchmarking report, but you receive two useful documents. The annual 404(a)(5) disclosure lists every investment option’s expense ratio as a percentage and as a dollar amount per $1,000 invested, beside its one, five and ten-year returns. Your quarterly statement shows plan administrative fees actually deducted in dollars. Adding the expense ratios of the funds you hold, weighted by how much you hold in each, gives your own all-in investment cost.
Fees are half the picture
A low-cost plan can still produce a poor result if the money sits in the wrong mix or moves at the wrong time. After checking fees, measure the account’s return with contributions removed and compare it with investors holding a similar mix. Pure Benchmarks, our own product, ranks a linked retirement account against real investors in the same risk category on a free account, so fees and results can be judged together.
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See Your Free Benchmark ReportFrequently asked questions
What is a 401(k) fee benchmarking report?
A report that compares what a plan pays for recordkeeping, administration, advice and investments with what similar plans pay. Employers use it to document that plan fees are reasonable, as ERISA expects of plan fiduciaries.
Does Vanguard provide a fee benchmarking report?
Vanguard, as recordkeeper, gives employers the 408(b)(2) fee disclosure that a benchmark is built from, and it has published guidance on comparing recordkeeping fees on a total cost of ownership basis. The benchmarking comparison itself is usually prepared with a consultant, advisor or benchmarking service.
Can a participant see the plan’s fee benchmarking report?
Usually not, because it is an employer document. Participants receive the annual 404(a)(5) disclosure with every fund’s fees and returns, and quarterly statements with the fees deducted from their account.
What is total cost of ownership for a 401(k) recordkeeper?
The provider’s base recordkeeping fee plus ancillary fees and any other revenue it earns from the plan. Vanguard argues this gives a fairer comparison than base per-participant fees alone.
How do I know if my Vanguard 401(k) fees are high?
Use the 404(a)(5) disclosure to find each fund’s expense ratio, weight them by how much you hold, and add the plan administrative fees from your statement. Then compare the result with low-cost index fund alternatives in the same plan.
Keep exploring
- 401(k) Fee Benchmarking: How Employers Benchmark Plan Costs, and What It Means for You
- Vanguard 401k Benchmarking Tools: What Vanguard Provides and What to Add
- Vanguard Retirement Plan Benchmarking: Plan Reports for Employers, Account Benchmarks for You
- What Is 401(k) Plan Benchmarking, and What Does It Mean for Me?
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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.