Costs of 401(k) plans continue to fall, driven by increased use of low-cost options, according to a joint study from the Investment Company Institute and industry researcher Brightscope.
 
Total plan costs, as measured by Brightscope, fell from 1.02 percent of assets in the average 401(k) plan in 2009 to 0.89 percent of assets in 2013.
 
The average plan participant in 2013 faced total plan costs of 0.58 percent compared with 0.65 percent in 2009, the study says, and the average dollar invested saw total costs of 0.42 percent in 2013, down from 0.47 percent in 2009.
 
Because most participants and assets are in larger plans with lower costs, individualized averages are lower.
 
The analysis, released Tuesday, analyzed 401(k) plan data filed with the Department of Labor.
 
Brightscope’s total plan cost includes administrative, advice and investment management fees.
 
“Mutual fund investors tend to concentrate their assets into lower-cost funds,” the study report said.
 
Index funds have helped drive down costs. The analysis shows that 90 percent of 401(k) plans offered index funds in 2013, which held more than a quarter of plan assets. In 2006, 79 percent of 401(k) plans in the Brightscope database offered index funds and 17 percent of plan assets were invested in such products.
 
Target-date funds have also become more common since 2006. Back then, 32 percent of 401(k) plans offered target date funds, but by 2013 that share grew to 73 percent. Over the same period, the percentage of assets invested in target date funds increased from three percent to 15 percent.
 
Equity funds had the largest share of assets in 2013, at 44.5 percent. Next in popularity was a general category of “other investments,” which includes company stock, at 16.2 percent of assets. Target date and balanced funds were close behind, with GICs (9.7 percent of assets), bond funds (7.9 percent) and money funds (2.5 percent) rounding out the mix.