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Greetings, Yodadmt, and welcome.

<<My company just decided to implement administrative fees. They decided to charge based on the balance of the account. In addition, for those of us that are self directed they will charge more than the mutual fund accounts. they debated this system vs a flat fee. They thought that if they charged a flat fee to all, it would discourage those will smaller accounts and they may drop out of the program. the spirit of the 401k is to grow your money in an unencumbered environment. Some accounts will now be charged up to $1000 per month. That seems illegal to me. How can they make a profit on some accounts and subsidize others. It would seem that they can only charge administrative fees for the resources used for our account.
Does anyone know the law around administrative fees for 401ks?>>

The law does not specify the size of such fees, only that they may be assessed to cover administrative charges. The employer does not have to absorb the costs of records keeping and trading, and many employers do not. They may be passed on to employees in an equitable fashion.

I have no idea why some accounts would be charges $12,000 per year in your case. If that's true, then these accounts are either subject to almost daily trading in large amounts, or they are $500K+ in size. That would put the fees in the 2.5% range per year. That might be slightly high, but I doubt if a court would find that unreasonable.

If you're talking about much smaller accounts being charged this amount, then perhaps the fees are too high. In this case you have two choices. Complain loudly and long to your employer or contact the Department of Labor and complain. DOL is already investigating excess charges in 457 plans, has jurisdiction over 401k plans, and might be able to tell you what you can do to get the fees reduced.

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