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How to Find & Calculate American Funds 401(k) Fees

Eric Droblyen

February 20, 2024

Table Of Contents

If you have questions about American Funds 401(k) fees – how they work, how much they cost on average, or how you can find & calculate them for your plan – you’ve come to the right place. In this guide, we’ll show you how to calculate the full cost of an American Funds 401(k) plan using their DOL-mandated fee disclosure.

By the end of this guide, our aim is for you to have a complete understanding of how American Funds’ pricing works, how much you’re paying, and how your fees stack up.

Let's dive in.

What are Average American Funds 401(k) Fees?

In our most recent Small Business 401(k) Fee Study, we found that American Funds plans cost small businesses an average of 1.56% of plan assets each year, with their admin fees totaling about $502.44 per participant.

Average American Funds 401(k) Fees

Avg. Plan Assets


Avg. Plan Participants


Per-Capita Admin Fees


All-In Fees


While their per-capita admin fee is already above the study average of $422.30, that number can easily grow much higher due to the way these fees are charged.

In our experience, about 80% of admin fees charged by American Funds are paid by revenue sharing – “hidden” 401(k) fees that lower the investment returns of plan participants. Not only are plan sponsors or participants often unaware that they’re paying them, but they’re always charged as a percentage of plan assets. That means plan participants will automatically pay American Funds higher and higher administration fees for the same level of service as their account balance grows. That’s not fair!

When you factor in compound interest, these growing fees can make a huge dent in your retirement savings. As such, you want to do everything in your power to avoid paying them.

If you’re using currently using American Funds for your 401(k), your first step to avoiding these fees is to find out whether or not you’re paying them. We’ll show you how to do that next.

High 401(k) Fees

How to Find & Calculate American Funds 401(k) Fees

To understand how much you’re paying for your American Funds plan, I recommend you sum their administration and investment expenses into a single “all-in” fee. Expressing this as both a percentage of plan assets, as well as hard dollars per-participant, will ultimately make it easier for you to compare the cost of your American Funds plan to competing 401(k) providers and/or industry averages.

To make this easy on you, we’ve created a spreadsheet you can use with all the columns and formulas you’ll need. All you need to do is find the information for your plan, then copy it into the spreadsheet.

American Funds 401k Fees_Template Spreadsheet

Doing this for American Funds can be a bit of a pain, but not to worry – we’ll show you everything you need to do in 4 simple steps.

Step 1 – Gather All the Necessary Documents

To calculate your American Funds 401(k) fees, you’ll need at least 3 documents:

  • Recordkeeping Services Agreement: American Funds is obligated by Department of Labor regulations to provide employers with a 408(b)(2) fee disclosure. This document contains plan-level information about the administration fees charged by American Funds. This information is intended to help employers evaluate the “reasonableness” of these fees. This document can be found on the American Funds employer website.
  • 404a-5 Participant Fee Disclosure: Plan sponsors are obligated by Department of Labor to provide participants with a 404a-5 fee disclosure each year. This document will give us the fund expense ratios.
  • Statement of Assets Report: this document provides a breakdown of how much money is invested in each fund in your 401(k) plan. These are also sent each year, and can be found on the employer website.

If you work with an outside Third-Party Administrator (TPA), you’ll need to factor their pricing into your American Funds fee calculation. Your TPA’s fees can be found in a services agreement or invoice.

Once you’ve gathered all the necessary documents, you’re ready to move on to step 2.

Step 2 – Locate American Funds’ Direct 401(k) Fees

401(k) administration fees can be “direct” or “indirect” in nature. Direct fees can be deducted from participant accounts or paid from a corporate bank account, while indirect fees are paid from investment fund expenses - reducing their annual returns.

Direct fees are the most transparent and are probably the ones you’re most familiar with.

With American Funds, your direct fees will depend on the share class of your funds as well as the total assets in your plan. The pricing model that breaks this out can be found in the “Exhibit B: Fee Schedule” section of your Recordkeeper Services Agreement:

American Funds 401k Fees_Direct Fees

In step 4, you’ll add this to a spreadsheet along with your TPA’s fees (if applicable) to calculate the direct fees charged in your American Funds plan.

Next, we’ll see if American Funds charges your plan any hidden administration fees.

Step 3 – Uncover American Funds’ Hidden 401(k) Fees

In our experience, roughly 80% of the administration fees charged by American Funds are paid by revenue sharing – a form of “indirect” fee paid from the operating expenses of some mutual funds. Revenue sharing increases the cost of a mutual fund, thereby lowering its annual returns. There are two basic forms:

  • 12b-1 fees – these payments usually compensate a financial advisor.
  • Sub-Transfer Agency (sub-TA) fees – these payments usually compensate a recordkeeper.

Neither 12b-1 fees nor sub-TA fees are disclosed as hard dollar amounts on the American Funds fee disclosure, which makes them really easy to overlook. Instead, these "hidden" fees are disclosed as a percentage of assets (each share class has a different %) in the “Exhibit C: Investment Option Payments to the Service Provider, TPA and Financial Professional’s Broker-Dealer Firm” section of the Recordkeeper Services Agreement:

American Funds 401k Fees_RevShare + Wrap

In step 4, you’ll add these two percentages together, then multiply them by the applicable fund balance to calculate the indirect fees charged by American Funds.

Step 4 – Calculate Your All-In 401(k) Fee

In this step, we’ll enter the information we found into our spreadsheet to calculate your plan’s total cost – or “all-in” fee (administration fees + investment expenses).

First, enter the fund information from your American Funds 408(b)(2) and your Statement of Assets document into the spreadsheet.

You’ll also need to find the expense ratios for each fund in your 404a-5 participant fee disclosure, then enter those into the spreadsheet as well.

American Funds 401k Fees_Expense Ratios-1

Once all the information is in, the formulas will automatically calculate your indirect fees.

American Funds 401k Fees_Indirect Fees

Next, we need to add your direct fees.

Start by entering American Funds’ direct fee into the appropriate line item towards the bottom of your spreadsheet. Then, add your TPA’s annual fee. 

American Funds 401k Fees_Complete Spreadsheet-1

At this point, all of your administration fees and investment expenses (net of indirect fees) should be broken out and totaled, giving you the all-in fee of your American Funds plan.

To make it easier for you to benchmark your fees against other plans, we recommend expressing this number as a % of plan assets. In our example, this number is 1.57% ($10,720.40/$681,866.17).

Evaluate Your Admin Fees on a Per-Capita Basis

After you have calculated your all-in fee, we recommend you take a quick look at your American Funds administration fees on a per-capita (i.e., headcount) basis.

The reason?

Excess administration fees – basically, fees that outstretch your 401(k) provider’s level of service – might not be readily apparent if they’re solely evaluated on an all-in basis with investment expenses. This is especially true if your plan has lots of assets.

To demonstrate the value of this evaluation, consider a $1,625,825.48 401(k) plan with only 7 participants from our 2018 small business 401(k) fee study. While its $25,611.64 all-in fee (1.58% of plan assets) was only a bit above the study’s 1.40% average, its $2,521.81 per capita administration fee ($17,652.64/7 participants) was about six times average!

To calculate your per-capita administration fees, simply divide the administration fee total from your spreadsheet by the number of participants in your plan. For our 10-participant example, this number is $856.23 – which is quite a bit higher than participants could be paying with a low-cost 401(k) provider.

Don’t Let Your American Funds 401(k) Fees Get Out of Hand

By now, you should have a complete breakdown of your American Funds 401(k) fees and how they’re being charged.

Even if yours are below average now, American Funds’ revenue sharing can cause them to very quickly become excessive as assets grow. For this reason, it’s crucial that you compare your plan’s fees on a regular basis.

Too much trouble? We’ve got a solution.

Simply switch to a 401(k) provider that charges fees based on headcount – not assets - to the extent possible. Such a fee structure will make it easier for you to keep your 401(k) fees in check as your plan grows. You just might save some money while you’re at it.

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