Excessive fees in small employer retirement accounts can take between $150,000 and $275,000 from the average American worker, according to a report published on Wednesday.

That's because employees in retirement plans with fewer than 100 participants pay a proportionally high amount to access a 401(k), according to a white paper by Scottsdale, Ariz.-based America’s Best 401k.

While the median annual asset-based fees for participants in plans with assets of more than $1 billion is about 0.27 percent, plans with $1 million to $10 million in assets carry average fees of 1.13 percent.

Nearly 90 percent of U.S. retirement plans have fewer than 100 participants. Small plan participants with a net income of about $30,000 per year will lose about $155,000 to 401(k) fees over their lifetime, while participants making about $90,000 per year will lose upward of $277,000 in fees, according to the researchers.

Asset-based fees taken from 401(k) accounts “are taken directly from participants’ accounts and have the greatest effect upon their long-term financial security,” according to the report.

Asset-based fees include fund expense ratios, broker and advisory compensation, record-keeping fees and custody fees. A small plan with a starting balance of $2 million, $250,000 in annual contributions and 7 percent annualized performance can realize as much as $2.5 million in recouped retirement savings just by cutting annual fees by a percentage point.

The study included plans from 11 providers: Paychex, ADP Retirement Services, John Hancock, Principal, Transamerica, Mass Mutual, American Funds, Voya Financial, Ascensus, Nationwide and Empower.

The plans most costly to participants, on average, were provided by MassMutual and carried 1.95 percent average asset based fees. Close behind were fellow insurance giants Nationwide, which saps an average of 1.87 percent in asset-based fees from participant accounts annually, and Transamerica, which takes 1.76 percent from plan participants each year.

Payroll processing giant ADP came in as the plan provider least expensive to participants, charging an average of 1.19 percent in asset-based fees to employees. ADP’s chief competitor, Paychex, came in second, charging an average of 1.21 percent in asset-based fees to its participants each year, followed by Principal, which levies average annual asset-based fees of 1.29 percent.

In many cases, small business employees enroll in plans provided by a company’s insurance provider that places them within a group annuity contract, adding significant expenses not found in traditional 401(k) plans.

Most of the plans in the study did not employ index funds, but instead relied upon actively managed funds that typically had revenue sharing arrangements with the plan providers.

The lack of efficient, low-cost passive index products hurts the average performance of mutual funds within small retirement plans, according to the research.

The bulk of the funds in plan lineups fail to outperform their benchmark indexes, according to the report. Large-cap equity funds failed to beat their index 92.2 percent of the time, while mid-cap equity funds underperformed their index 95.4 percent of the time. Fixed-income indexes did not fare very well either: while 83.6 percent of municipal bond funds fail to beat their index, 95.9 percent of high-yield funds underperformed, according to the research.

When an index fund was offered, many of the plans charged participants significant marked-up fees. One plan in the study offered the Vanguard Total Stock Market Index Fund for a 1.62 percent annual fee when the direct cost from Vanguard was just 0.05 percent, a 3,120 percent markup.

The researchers note that greater costs are typically incurred in providing small retirement plans, as they lack the scale to distribute costs among their participants. However, a technologically driven crop of next-generation retirement plan providers may be able to service small employers while cutting asset-based fees by 50 percent or more.