Capital Wealth · Planning · The Plan Review
This is a real 401(k) fee disclosure — a large medical device manufacturer, November 2025, names removed, numbers untouched. The surprise isn’t that the plan is bad. The plan is excellent. One optional line still costs some employees more than everything else on the page combined. For where the default itself came from — the 2006 law, the four QDIAs, the Stanford evidence — the sibling essay is Your 401(k): The History, The Law, And The Fees. This page is the document itself, read line by line.
| What’s printed | The translation |
|---|---|
| The default target-date fund costs 0.065% — 65 cents a year per $1,000. | Genuinely excellent. Stanford’s research draws the line at 0.30%. This is a fifth of that. |
| The S&P 500 index option costs 0.02% — and matched its benchmark to the hundredth. | Whoever built this menu did right by the employees. Credit where due. |
| The optional “Professional Management Program”: 0.50% on the first $50,000 — to allocate you across those same funds. | 7.7 times the cost of the fund it puts you in. That’s the line worth circling. |
| A flat $49 a year plus the priciest tier on the first $50,000, whoever you are. | The smallest balances pay the highest rate — 0.76% all-in at $25,000, 0.37% at $500,000. |
| Two company stock funds returned −15.9% and −1.0% a year over five years, against +14.5% for the S&P. | The disclosure itself prints the warning: over 20% in one company isn’t diversified. |
Every number above is on the document. Nobody reads the document. This page teaches you to read yours in fifteen minutes — and the last section is the checklist.
Once a year your plan mails you its price tag. It’s called the “Disclosure of Plan-Related Information” — federal law makes them send it. It looks like junk mail. It goes in the recycling. It is the most useful piece of mail your plan will ever send you.
The one on our desk runs seven pages. The first few are housekeeping — how to change funds, the optional managed-account program, the brokerage window. Then the fees: a flat $49 a year for everyone (the same $49 whether you hold $8,000 or $800,000 — so it hits the smallest accounts hardest), plus one-off charges like $50 to start a loan. Then the document becomes two tables. The two tables are the real document.
Table 1 is performance — every fund next to its benchmark, one, five and ten years. This plan’s S&P 500 fund matched its index to a rounding error: working exactly as designed. The two company stock funds — unnamed here, they’d name the employer — returned −15.9% and −1.0% a year over five years while the S&P made +14.5%. The government’s own warning is printed right beside them: more than 20% in one company isn’t diversified. The document tells you. It just tells you quietly.
Table 2 is cost — every fund’s expense ratio, shown as a percentage and as dollars per $1,000. Here is this plan’s menu, cheapest to dearest:
| Fund | Expense ratio | Per $1,000 |
|---|---|---|
| Vanguard Institutional Index (S&P 500) | 0.02% | $0.20 |
| Vanguard Mid-Cap Index | 0.04% | $0.40 |
| Vanguard Small-Cap Index | 0.04% | $0.40 |
| Vanguard Target Retirement Trust I (every vintage — the default) | 0.065% | $0.65 |
| The two company stock funds | 0.10% | $1.00 |
| Vanguard Equity Income | 0.18% | $1.80 |
| Vanguard International Growth | 0.25% | $2.50 |
| American Century Inflation-Adj Bond | 0.29% | $2.90 |
| Invesco Stable Value | 0.31% | $3.10 |
| Large Cap Growth Fund II | 0.375% | $3.75 |
| PIMCO Total Return | 0.51% | $5.10 |
| T. Rowe Price Small-Cap Growth | 0.65% | $6.50 |
| Columbia Small Cap Value CIT | 0.72% | $7.20 |
Here’s what no page of the packet does: add it up for you. The fund fee is in one table, the $49 in another section, the optional management fee in a third. Your true all-in percentage appears nowhere. Adding it up takes fifteen minutes, and the checklist at the bottom of this page walks you through it.
The disclosure is honest. It is just not additive. Every fee is disclosed somewhere; no two fees are disclosed in the same place; and the one number that would change behavior — your total cost as a percentage of your balance — appears nowhere. That is not a conspiracy. It is a compliance document doing compliance, and it is why a fifteen-minute read with a calculator finds things a decade of statements never showed you.
And read Table 1 before Table 2. Performance against benchmark is the free diagnosis: an index fund matching its index is working; an active fund trailing its benchmark at one, five and ten years while charging ten times the index fund’s fee is a question with only one honest answer.
It’s the first question we ask on every 401(k) call, and the answer is almost always the same: “I think I just went into the default.” Nothing wrong with that answer — but it’s worth knowing what the default actually is, who chose it, and why it exists.
The default has a legal name: the QDIA — Qualified Default Investment Alternative, born in 2006. Before then, auto-enrolled workers got parked in money market funds that earned nothing after inflation. The 2006 law offered employers a deal: default workers into an approved fund type and get legal protection for the decision. Employers picked target-date funds, and the TDF became America’s retirement plan overnight. Understand what that means: you’re probably in a target-date fund because of a law, not because anyone decided it fit you. The legal safe harbor protects your employer’s process. Nobody — no regulator, no court — ever reviews your outcome. The full history — the 2006 act, the four QDIAs, the case law — is on the sibling page →
So are target-date funds good? Stanford’s John Shoven studied the whole industry for the National Bureau of Economic Research. Three findings, worth memorizing. One: fees decide. Funds under roughly 0.30% track their benchmarks. Funds above it drift — and the drift runs negative. All 35 of the worst performers in the study were high-cost funds. Two: the “date” is not a seatbelt. In the 2020 crash, even the 2025 funds — held by people five years from retirement — fell 20–25%. Three: the cheap funds also performed better. Not just lower bills — better risk-adjusted returns.
The default is a policy triumph and a personal question mark. Auto-enrollment into a dated fund beats the cash-parking that preceded it, full stop. But a default is sized to a birth year, not to you — it doesn’t know you have a pension floor, a working spouse, company stock next door, or nerves that will sell the bottom in March. Stanford’s own stress test says the 2025 fund was still fully capable of a 25% drawdown five years before its date.
And notice what this plan quietly proves: when the menu is cheap, the default is fine — so the money question moves to the layers on top of it. Which is exactly where this document gets interesting.
Now the line worth circling. The disclosure offers an optional service — a Professional Management Program. Enroll, and a professional allocates your account and rebalances it as you age. The price, billed monthly, deducted straight from your account:
| Balance tier | Annual rate |
|---|---|
| First $50,000 | 0.50% |
| Next $50,000 | 0.40% |
| Next $50,000 | 0.30% |
| Over $150,000 | 0.25% |
Put that next to the fund menu. The target-date fund costs 0.065%. The program charges 0.50% to manage it for you. The advice costs 7.7 times the investment it advises you into. And because the priciest tier is the first $50,000, the smallest accounts pay the highest rate:
| Balance | All-in cost, in the program | All-in cost, same fund, no program |
|---|---|---|
| $25,000 | 0.761% | 0.261% |
| $50,000 | 0.663% | 0.163% |
| $100,000 | 0.564% | 0.114% |
| $150,000 | 0.498% | 0.098% |
| $250,000 | 0.425% | 0.085% |
| $500,000 | 0.370% | 0.075% |
Is half a percent real money? Here’s 0.50% versus 0.30% — the only thing that changes is the fee:
| Starting point | 10 years: saved at 0.30% | 20 years: saved at 0.30% |
|---|---|---|
| $50,000 + $10,000/yr | $3,055 | $15,256 |
| $150,000 + $12,000/yr | $6,866 | $30,433 |
| $250,000 + $15,000/yr | $10,805 | $46,462 |
| $250,000, no new money | $8,888 | $33,683 |
Now the fair part — the program is not a scam, and for some people it earns the fee: the employee who will never once rebalance, and above all the investor who would have sold everything in March 2020 and didn’t, because someone else was holding the wheel. That’s worth real money. The honest question is narrower: are you getting a personalized strategy, or paying 0.50% for the allocation the 0.065% fund would have given you anyway? Put your program allocation next to the target-date fund’s and you have your answer. Most people have never looked.
This is the whole modern 401(k) story in one document: the funds got cheap, so the fees moved upstairs. The menu costs almost nothing. The management layer costs what active funds used to. The employer did its fiduciary job on the fund lineup; nobody is assigned to do that job on your optional add-ons — the safe harbor from section three covers the default, not the extras you were invited into.
Weigh it like an underwriter, not like a loyalist. If the program is holding your behavior together, 0.50% may be the best money you spend. If it is mirroring the default glide path with your name on it, you are paying 7.7 times the going rate for a birthday-based allocation. Fifteen minutes with both statements answers which one you are.
Fair question — suspicious is the correct posture toward advisors who call you. The review runs the CFP Board’s seven-step planning process, compressed to twenty minutes: we (1) learn your situation — balance, plan, match, years to retirement; (2) pin down the goal the account is actually for; (3) analyze the current course — your allocation, your all-in fee, the layers you may not know you’re paying — against the alternatives already inside your plan’s menu; (4–5) develop and present the recommendation in plain English, on one page; (6) implementation is yours — every change happens inside your own account, through your own login; (7) and monitoring is a standing offer, not a subscription.
The economics, with no weasel words: we earn nothing on this review. Your 401(k) stays at your employer; we can’t touch it, custody it, or bill it — and we cannot change the menu, only navigate the one your plan already offers. We do this because some reviews surface an old 401(k) from a previous job, an IRA, or a planning engagement that a household later chooses to bring to us — that is the business model, disclosed up front. If your plan checks out, the review ends with a handshake and you keep the checklist. About a third of the time, that is exactly what happens — and those calls are the best advertising we have.
1. Find the disclosure: search your plan portal for “404a-5,” “participant fee disclosure,” or “plan and investment notice.” It’s a PDF, issued annually. 2. Find your allocation: are you in the target-date default (the QDIA), or did you ever actually choose? 3. Total your real fee: multiply each fund’s expense ratio by the dollars you hold in it, add the flat administrative fee, and divide by your balance — that percentage appears nowhere on your statement. 4. Check for the management layer: look for a monthly “advisory,” “managed account,” or “professional management” deduction — many people enrolled years ago and forgot. 5. Read Table 1: is each of your funds beating, matching, or trailing its own benchmark at five and ten years? 6. Check company stock: over 20% of your balance in your employer is a concentration problem the DOL warns about on the document itself. 7. Check the match and vesting: confirm you’re contributing at least to the full match — it is the one guaranteed return in the building. Bring the disclosure and your latest statement to the call, and we’ll do the arithmetic together.
The document is honest but never additive: the fund fee, the flat $49, and the optional management layer each live in a different table, and your true all-in percentage appears nowhere. Fifteen minutes with a calculator — performance against benchmark, cost per $1,000, one look for the management deduction — is the whole read, and it finds things a decade of statements never showed you.
Twenty minutes, your statement and your plan’s 404a-5 in hand. You leave knowing your all-in percentage, what the optional layers cost, and whether the default still fits — whatever you decide to do about it.
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