Why is it that as an individual, I can invest in whatever fund Vanguard has, but with a small business account, there is a $20 fee for each fund? Is it harder to serve a small businesses, especially if it's a self-employed 401k where presumably I am the only person in the plan?

https://investor.vanguard.com/what-we-offer/small-business/individual-401k?Link=facet (search for "$20")

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    I don't know what kind of answer would suffice here. "Because they can" would be snarky, I suppose. Any company can offer a schedule of fees and hope that customers are not turned away by those fees. It's costly to maintain an account, especially a small one. 3 funds, $60/yr seems reasonable. 1% on $6K, but you'll quickly see the % drop as you blow past $30K. Vanguard is a leader in this field, pushing expenses down, – JoeTaxpayer Jan 14 '17 at 18:57
  • Not only is there a fee, but I have to call in to add fund options. It's weird. I was hoping that there was some fundamental difference that would make the fee make sense. – Andrew Jan 14 '17 at 20:30

401(k) plans, 403(b) plans, IRAs etc all require more paperwork than a non-tax-advantaged investment. As a result, most such plans (with Vanguard as well as with other management companies) offer only a small set of investment options, and so it costs the plan sponsor (you wearing your Employer hat) money if you want to add more investment options for your Solo 401(k) plan). Note that with employer-sponsored retirement plans, investments in each mutual fund might be coming in small amounts from various employees, much less than the usual minimum investment in each fund, and possibly less than the minimum per-investment transaction requirement (often $50) of the fund group. Taking care of all that is expensive, and it is reasonable that Vanguard wants to charge you (the Employer) a fee for the extra work it is doing for you.

When I was young and IRAs had just been invented (and the annual contribution limit was $2000 for IRAs), I remember being charged a $20 annual fee per Vanguard fund that I wanted to invest in within my IRA but this fee was waived once my total IRA assets with Vanguard had increased above $10K.

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