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Our radical approach to 401(k) fees
401(k) Starting a 401(k) for your business

Our radical approach to 401(k) fees

Jeff Rosenberger, PhD

Since day one, our goal has been to make it easy and affordable to save for retirement. This mission guides how we think about 401(k) fees, too.

Most 401(k) providers charge both sponsors (employers) and participants (employees) a laundry list of investment, administrative, and service fees. Collectively, these notoriously convoluted fees represent a 401(k) plan’s “expense ratio”—the total amount charged as a percentage of assets held. And since these fees are frequently a percentage of total assets, these fees grow as retirement savings grow!

If that seems complicated to savvy business owners, you can imagine how their employees feel. That’s why we’ve taken a different approach.

We don’t charge investment fees to participants

Nearly half of U.S. households aren’t saving enough for retirement. Participant fees make matters worse since they are taking away money that could have been otherwise invested. Thanks to compound interest, even modest 401(k) contributions can grow substantially over time. On the flip side of that coin, seemingly modest percentage fees can cost individuals hundreds of thousands in the long run. That’s why Guideline’s doesn’t charge employees added investment fees on their balance.

The mutual funds in our managed portfolios are selected for their low fees, among other criteria. While they do charge our participants pass through fees ranging from 0.064% to 0.07%, none of those proceeds come our way. We don’t charge investment fees on top of the mutual fund fees.

Additionally, these mutual fund fees are substantially less than what participants under other providers pay. According to the 401k Averages Book (20th Edition), a typical small business 401(k) plan with 25 participants and an average account balance of $10,000 costs each participant 1.68% in fees annually. At a smaller company with just 10 participants with an average account balance of $10,000, that fee increases to 1.71%.1

Over time, the difference between 0.07% and 1.68% comes out to hundreds of thousands of dollars over a 40 year career. It’s clear which is the better deal for your employees.

Our sponsor fees are competitive for small businesses

Like other 401(k) providers, Guideline does charge plan sponsors. But that’s where the similarities end. While most providers charge for variables like assets under management and even commissions, Guideline’s pricing model is crystal clear: Each month, clients pay a base fee and $8 per participating employee. The monthly base fee is either $39 or $99 depending on the pricing plan.

What’s this look like in practice? With 10 employees on your retirement plan, Guideline can cost sponsors as little as $1,428 per year.2

In comparison, legacy providers who charge based on assets under management cost more. Assuming that each individual on the plan has $10,000 in their account, companies with 10 employees can expect to pay $2,230.3

Not only is Guideline affordable for small businesses, it’s also a great deal for employees. Learn more about Guideline’s services and fees here.

Thanks to the SECURE Act and a variety of tax incentives (up to $16,500 in tax credits over a three-year period), many of these costs are deductible. In fact, the tax credits can completely offset sponsor fees for some businesses! Check out our tax calculator to see if your business qualifies.


In the end, our pricing differs from the competition’s in two big ways: We don’t charge active participants annual fees and our sponsor fees are transparent and predictable. For small businesses who are often priced out of offering a 401(k) plan, that’s more than just a good deal—it’s a way to invest in your people and their futures. Schedule a call with one of our retirement experts to get started.

1 The average investment expense of plan assets for 401(k) plans with 25 participants and $250,000 in assets is 1.68% of assets, according to the 20th Edition of the 401k Averages Book, with data updated through September 30, 2019, and is inclusive of investment management fees, fund expense ratios, 12b-1 fees, sub-transfer agent fees, contract charges, wrap and advisor fees or any other asset based charges.

2 The information presented is for illustrative purposes only and does not represent the actual costs you may incur as a Guideline client. Calculations assume the Startup pricing plan with a monthly base fee of $39 plus $8 per month per participating employee and 10 participating employees. Learn more about plan sponsor fees here.

3 401k Averages Book, 20th Edition, Chart 1.3 (p.10) and Chart 2.3 (p.14).

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