They&#x27;re competing with other 401k plans that do the same, but charge a much bigger percentage, and mutual&#x2F;index funds do, in general, charge a percentage of the funds under management.  Don&#x27;t look a gift horse in the mouth.<p>However, you&#x27;re right that costs are less-than-proportional to funds under management, so they usually offer to lower the percentage as you invest more, cf. Vanguard admiral-class shares: <a href="https:&#x2F;&#x2F;investor.vanguard.com&#x2F;mutual-funds&#x2F;admiral-shares" rel="nofollow">https:&#x2F;&#x2F;investor.vanguard.com&#x2F;mutual-funds&#x2F;admiral-shares</a>