What Vanguard’s historic fee cuts mean for your Guideline 401(k)

In celebration of their 50th anniversary, Vanguard announced their largest fee reduction ever at the beginning of February, cutting fees on 168 share classes across 87 funds. This includes several of their most popular exchange-traded funds (ETFs), along with many of the index funds in the Guideline managed portfolios and fund lineup. This is a big deal for investors, with Vanguard estimating over $350 million in savings in 2025 alone.

Vanguard is known for its unique client ownership structure and their focus on low-cost investing. These new fee reductions take it to the next level. Some funds will see expense ratios drop by as much as 0.05% (or five basis points), bringing Vanguard’s average fund expense ratio down from 0.08% to 0.07%. Across the $10 trillion in total funds they manage, this puts their revenue run rate at around $7 billion. Given the size of the move, this could have ripple effects across the industry, driving down costs for investors more broadly.

"At Vanguard, we believe our funds’ impressive long-term performance owes much to their low costs. For the 10 years ended December 31, 2024, 84% of our funds outpaced the average results of competing funds."

John C. Bogle

Founder, Vanguard

How fees impact your savings

The administrative, record-keeping, service, and other fees that come with managing your 401(k) plan typically range between 0.5% and 2%, and they vary based on multiple factors, like the size of your employer's 401(k) plan, the number of participants, and your provider. Large plans (with more than $100 million in assets) tend to have fees below 1%, whereas smaller plans can have fees between 1–2% or more.

While 1 or 2% may seem like nothing, this is not at all the case when you factor in years of compounding. As your funds grow over time, the amount you are paying in fees increases proportionally — so higher fees can mean thousands of dollars less in savings for your retirement.

Similarly, small savings in fees can compound over time. Because mutual fund fees are netted out of dividend and interest payments, you tend not to see or notice them, but that doesn’t mean they don’t matter. Even small fee cuts could make a meaningful difference in your retirement savings over longer periods.¹

How Vanguard’s fee cuts affect your Guideline 401(k)

At Guideline, we have remained focused on providing low-cost, high-quality retirement plans since we launched in 2016. We are delighted that Vanguard’s fee cuts can directly benefit participants in Guideline 401(k) plans.

Four of the funds with reduced expense ratios (VTMGX, VEMAX, VBTLX, and VTABX) are featured in our managed portfolios. This will bring the average fees for those portfolios down from 0.067–0.069% to 0.058–0.061%. And another 18 funds in our fund lineup will also see lower fees (see the complete list below).¹

Altogether, the approximately 0.01% lower fund fees can amount to about $1–2 million in 2025 savings for Guideline participants across the $17 billion on our platform, depending on market volatility. Another way to think about the almost 0.01% fund fee savings and what that may mean for you, is $1 in annual savings for every $10,000 invested in funds with the reduced fee.¹

Vanguard funds with fee cuts in 2025²

Here is the full list of funds impacted by Vanguard’s 2025 fee reductions that appear in Guideline’s fund lineup: