Mutual fund fees in 401(k)s have declined during these inflationary times, while Americans are paying more for everything else, including car insurance, college tuition and monthly rent. In 2023, 401(k) plan participants incurred substantially lower fees for mutual funds than they did two decades ago, according to a new Investment Company Institute (ICI) report, "The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2023." As a result, 401(k) plan participants have achieved higher returns and higher balances in retirement.

From 2000 to 2023, the average equity mutual fund expense ratio paid by 401(k) participants dropped by 60% and their average bond mutual fund expense ratio by 63%.. "This is great news for American workers looking to invest for the long-term and drive growth in their 401(k) plan nest eggs …," said Sarah Holden, ICI Senior Director, Retirement and Investor Research. "Retirement savers continue to see high value investing in mutual funds, which are diversified, professionally managed, and cost-effective. Competition, clear disclosure, the rising role of index funds, and plan participants' investment choices continue to reduce the costs of saving for retirement through 401(k) plans."

The long-running decline in average mutual fund expense ratios paid by 401(k) investors primarily reflects a shift toward lower-cost funds, which includes movement to no-load fund share classes, according to ICI.