401(k) ReviewComprehensive 401(k) Review & Optimization
Many 401(k) participants may be unknowingly paying higher-than-necessary fees or holding sub-optimal allocations. SWE90's review helps identify opportunities to discuss with a qualified adviser.
Last Updated: March 2026 | Written by Brett R. Henderson, CIMA®, CPFA®, CRPS®, CEPA®, AIF®, CLU®, BFA™
What is a 401(k) review?
A 401(k) review is a comprehensive analysis of your employer-sponsored retirement account to evaluate investment selections, fee structures, and allocation strategy. The goal is to optimize your portfolio for growth while minimizing costs and aligning with your retirement timeline.
"Industry surveys commonly report total 401(k) plan fees in the 0.5%-1.5% range, varying widely by plan size and recordkeeper (e.g., BrightScope/ICI 401(k) Plan Fee Study). On larger balances, even a small fee differential compounds materially over a career. Reviewing the plan's 408(b)(2) and 404(a)(5) fee disclosures is a practical first step for participants and plan sponsors."
Brett R. Henderson, CIMA, CPFA, CRPS
Fiduciary Financial Advisor, SWE90, On hidden 401(k) costs
401(k) Review by the Numbers
$500K+
Illustrative lifetime cost of a 1% fee differential on a $1M portfolio (hypothetical compounding example over 30 years; not a forecast or SWE90 result)
SEC Investor Bulletin (illustrative compounding example)
0.03%
Lowest available index fund expense ratio
Fidelity/Vanguard
$23,000
2024 employee 401(k) contribution limit
IRS
$30,500
2024 limit with catch-up (age 50+)
IRS
What You Get
- Complete fee analysis and comparison
- Investment option evaluation
- Asset allocation review
- Contribution optimization
- Rollover analysis for old 401(k)s
- Roth vs. traditional guidance
Our Process
Are Your 401(k) Fees Too High?
Discover how much Excessive or undisclosed fees may be costing your retirement savings over time.
401(k) Review: Key Takeaways
- 1.Total 401(k) fees above 1% are a red flag. Request your plan's fee disclosure document.
- 2.Illustrative compounding example: a 1% annual fee differential on a $500,000 balance, compounded over 25 years at an assumed 7% gross return, produces a difference of roughly $300,000 in ending value. This is a hypothetical example only and does not reflect any specific investment.
- 3.Capturing the full employer match increases your total compensation; for a plan that matches dollar-for-dollar up to a percentage of pay, each matched dollar effectively adds to your contribution. Match dollars are subject to your plan's vesting schedule and contribution limits, and once invested they are subject to market risk like any other 401(k) balance.
- 4.Consider a split traditional/Roth 401(k) strategy for tax diversification in retirement.
Traditional 401(k) vs. Roth 401(k)
| Feature | Traditional 401(k) | Roth 401(k) |
|---|---|---|
| Tax on Contributions | Pre-tax (reduces current taxable income) | After-tax (no current deduction) |
| Tax on Withdrawals | Taxed as ordinary income | Tax-free (if qualified) |
| RMDs Required? | Yes, starting at age 73 | No (after rollover to Roth IRA) |
| Best For | Higher current tax bracket, lower in retirement | Lower current bracket, expect higher in retirement |
| 2024 Contribution Limit | $23,000 ($30,500 if age 50+) | $23,000 ($30,500 if age 50+) |
Source: IRS Publication 560, SEC Investor Bulletin. Limits for 2024 tax year.
Frequently Asked Questions
How do I know if my 401(k) fees are too high?
Total 401(k) fees should be under 1%. Warning signs include expense ratios above 0.75%, unexplained service fees, and limited fund options. Request your plan's fee disclosure (form 408(b)(2)) and compare to industry benchmarks.
What is a good expense ratio for a 401(k)?
Target expense ratios: Index funds 0.03-0.10%, actively managed stock funds 0.50-0.75%, bond funds 0.15-0.40%. A 1% difference in fees can cost hundreds of thousands over a career.
Should I roll over my 401(k) to an IRA when I leave my job?
A rollover decision depends on factors specific to your situation including the available investment options and fees in each plan, creditor-protection considerations, the age-55 separation-from-service exception that applies to 401(k)s but not IRAs, any employer stock with embedded gains that may qualify for NUA treatment, and your overall tax picture. ERISA-protected plan assets and IRA assets have different protections; consult a qualified adviser and consider tax counsel before deciding.
What is the difference between traditional and Roth 401(k)?
Traditional: contributions reduce taxable income now, withdrawals taxed in retirement. Roth: after-tax contributions, tax-free withdrawals. Choose Roth if you expect higher rates in retirement. Many benefit from a split strategy.
How much should I contribute to my 401(k)?
A general framework is to contribute at least enough to capture the full employer match (subject to vesting) and then increase contributions as your budget allows. The IRS sets annual contribution limits each year; for the current limits, see irs.gov/retirement-plans. The right contribution rate depends on your goals, other savings, tax bracket, and time horizon; consider discussing with a qualified adviser.
Sources & References
Data from the following authoritative sources is referenced on this page. According to these research organizations and government agencies:
- 1.Source: SEC Investor Bulletin (illustrative compounding example) (2024); Hypothetical compounding example: a 1% fee differential on a $1M portfolio over 30 years can total $500K+ in foregone growth under specified return assumptions. Not a forecast.
- 2.Source: Fidelity/Vanguard (2024); Lowest index fund expense ratios at 0.03%
- 3.Source: IRS (2024); Employee 401(k) contribution limit: $23,000 ($30,500 catch-up)
- 4.Source: BrightScope (2024); Average total 401(k) plan fees of 0.82%
Ready to Get Started with 401(k) Review?
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Schedule ConsultationImportant Disclosure: All investing involves risk, including possible loss of principal. Past performance is not indicative of future results. The information provided is for educational purposes only and should not be construed as personalized investment advice. Not FDIC Insured. No Bank Guarantee. May Lose Value. Please consult with a qualified financial advisor before making investment decisions.