LAST REVIEWED Dec 16 2020 5 MIN READ
By The Human Interest Team
We’ll come right out and say it: The 401(k) industry is notorious for being filled with dozens of sneaky, shady fees that can take advantage of companies and their employees.
Human Interest exists to make retirement benefits accessible to people in all lines of work. That’s why we designed our business to keep fees low, right from the start. Today, we’re taking our affordable pricing model one step further by eliminating all 401(k) transaction fees.*
Here’s the full list of fees we’re getting rid of
With Human Interest, you will never pay any of these fees:
*Benchmark estimate based on comparative fee disclosure information of 401(k) plans.
These pesky, burdensome fees can feel like surprises – not the good kind
A 401(k) is a powerful savings vehicle but many people are not aware that it can come with unexpected financial penalties and punishments. Transaction fees come up often at moments when people aren’t expecting them and are already feeling some pain, such as a divorce, job loss, or when they need a loan. On top of the upheaval in someone’s life, a fee can feel like salt in the wound. For small businesses, they can stretch tight budgets.
A divorce: A $500 fee for dividing up assets during divorce (aka a qualified domestic relations order or QDRO), can place a real burden on American families. In fact, about 40 percent of households report it would be difficult to pay a $400 unexpected expense.
A loan: To get a 401(k) loan, there’s usually an application or origination fee. Let’s say that’s $150 (we’ve seen this run as high as $325). On top of that, many providers issue an annual loan maintenance fee of about $75. If you take a loan, with a typical five-year loan, you’d run into $450 in costs not to mention the opportunity cost of missing out on any growth your money would have had in your 401(k). (Note: Taking savings out of a 401(k) runs the risk of reducing retirement wealth by 25 percent, so these loans are often not advised and only used for extenuating circumstances.)
Why zero 401(k) transaction fees?
Employer-sponsored 401(k)s are supposed to be America’s primary retirement savings vehicle. Unfortunately, most working Americans don’t have access to a way to save for retirement through work. Human Interest was founded to change that.
Creating a better financial future for everyone means taking bold steps to help fix a broken industry. We want to help more of the 100 million Americans not saving enough for retirement and we believe it’s not fair to ever be blindsided by hefty, hidden fees. The elimination of these fees builds on our already low-cost offering and serves as a powerful example of our commitment to the financial wellness of our customers and their employees.
*What’s a 401(k) transaction fee?
A 401(k) transaction fee is a fee that is charged to companies or plan participants based on an action or event. For example, when a company makes changes to their plan or when a participant takes money out of their 401(k). Our research found that this term reflects how customers typically think about these fees. On the participant side, 401(k) transaction fees are often triggered by life events, are often unexpected, and come at a time when things are not going so well (e.g. a divorce, a job loss, etc). We don’t believe that fees should be levied in these situations.
The Human Interest Team
We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment advising, and integration with leading payroll providers.