Administrators of 401(k)s are paid for their recordkeeping service, which includes sending out account statements and other communications to participants. They also may make money from investment-management fees if their mutual funds are offered in a plan and through an arrangement with third-party fund providers known as revenue-sharing.

Revenue-sharing, where a mutual-fund company passes some of the fee revenue it earns back to a plan's recordkeeper, "is a widespread practice," a January study by the U.S. Government Accountability Office found. Compensation can range from 5 basis points to 125 basis points from those arrangements, the study found.

Paying Attention

Employers are paying more attention to fees and investment choices in their 401(k)s than ever before, said Wray of the Profit Sharing/401k Council of America, a Chicago-based nonprofit representing employers that offer retirement plans. That scrutiny may allow some banks to win new business if they offer lower fees, better investments or both, he said. Bank of America, JPMorgan and Wells Fargo would not disclose the average fees for plans they serve.

Hallmark moved its 401(k) administration to JPMorgan last year after shopping its plan around in 2009, said Franklin. JPMorgan had the best price for the services Hallmark wanted, said Franklin. Hallmark has 16 funds in its plan including two JPMorgan funds, Franklin said. She declined to disclose how much they pay the bank in fees or quantify their savings.

The plan was previously administered by Aon Hewitt, which declined to comment on the change or its fees, according to spokeswoman MacKenzie Lucas in an email.

''Brain Transplant''

"I kind of compared it to doing a brain transplant," Franklin said of the switch. "It was a critical project for us. Our vendor is really in many cases the face of Hallmark for the employees." Hallmark was able to streamline its automated files, shift employees from paper to electronic statements and re-emphasize its online investment-advice feature for participants through the change, Franklin said. The company has about 13,000 workers in its 401(k) plan with $2.4 billion in assets, she said.

Employers who sought bids on their 401(k)s in the last year were able to realize average cost savings of 31%, said Institutional Investment Consulting Managing Director Michael Kozemchak, based on the plans his firm works with. Kozemchak, based in Bloomfield Hills, Michigan, works with plan sponsors that are choosing a 401(k) administrator.

Not all banks are rushing into defined contribution plans. New York-based Citigroup Inc., the third-largest U.S. lender by assets, doesn't have a 401(k)-administration business.

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