The questions and guidance below will help you get the right-priced plan for your business and ensure your 401(k) investments have low fees so your money has the opportunity to work harder.

1.	What fees are charged for our plan, as a percentage of a participant’s contributions?
	•	Administrative fees (typically paid by the employer)
	•	Recordkeeping fees (paid by employer or employees)
	•	Investment management fees (paid by employees out of 401(k) balances)
	•	All other fees (e.g. loans, distributions, etc.)

2.	What are all of the components of the investment management fees paid by plan participants?
	•	Mutual fund expenses: sales loads, administrative fees, 12(b)-1 fees, shareholder-servicing fees, etc.
	•	All other investment management fees: wrap fees (common for variable annuity 401(k)s), investment advisory fees, transaction fees, etc.

3.	What services do those investment management fees cover? At a minimum, all 401(k) participants should receive the following services:
	•	Fund selection — fewer than twenty high-quality, low-expense index funds that provide adequate diversification
	•	Model investment portfolios — risk-based or life-cycle
	•	Investment guidance — for example, online investment advice tools and onsite visits as necessary
	•	All brokerage services — unlimited purchases, sales, and exchanges
	•	Complete account services — on-demand custom statements, quarterly performance reports, and annual account statements
	•	A limited set of additional fees may be charged for participants seeking a loan or a distribution

4.	What is the average “portfolio turnover” for the funds in our plan?
	•	The average actively-managed equity mutual fund turns over 100% of its portfolio each year, adding 0.50% or more in hidden costs that are rarely reported.*
	•	Never offer any fund that’s turning over its securities more than 50% in any given year. Ideally, turnover is less than 25%. Index funds tend to have extremely low turnover.

5.	What index-based funds do you offer in our plan?
	•	Switch out of actively managed funds into index funds (e.g., S&P 500, Russell 3000, Lehman Aggregate Bond Index, etc.)
	•	Provide an adequately diversified set of investment offerings: domestic equities (small-cap and large-cap), foreign equities (European and emerging markets), and fixed income (short-, medium-, and long-term bonds)
	•	Limit total investments to twenty or fewer, and specialty offerings (like TIPs or REITs) to a few
	•	Provide model portfolios that help employees make appropriate investment decisions

6.	Do you provide every participant with a complete listing of investment management fees?
	•	Make certain this important fee disclosure is available online and on demand to all employees
	•	Ensure that the fees are declared in a way that lets every employee fully understand what they’re paying

*Investment Wisdom and Human Values, Bogle Financial Markets Research Center, April 2006.