Assessing Retirement Plan Value - 5

1.68%
0.67%
1.27%
27%
2%
7%
%
0.36%
1.68%
1.61%
7%
1.23%
0.21%
1.17%
27%
1.2 %1.61%
1.68%
0.58%
0.87%
1.2 %27%
NUMBER
>MORE THAN A
2.27%0.83% 0.78%
1.27%
0.21%
1.68%
1.27%
0.21%
0.47%
1.68%
1.68% 0.68%
0.87%
1.68%
1.27%
0.58%
1.68%
0.27%
2.27%
07
0.230%8%.58%
0.58%
2.27%
0.27%
0.78%
0.78%
1.68%
0.58%
0.72%
0.78%
0.58%
1.27%
1.68%
1.27%
1.68%
1.27%
1.68%
1.68% 0.83%
1.68%
2.27%
2.13%
1.68%
0.32%
2.27%
2.13%
2.13%
Total Cost and its Components
NAVIGATING COST CONSIDERATIONS
WHAT DOES IT MEAN?
UNDERSTANDING
RETIREMENT PLAN COSTS
It is common to see fee proposals for retirement plan
services that break out various types of fees that will
apply to the plan. However, there is no industry standard for
what service providers call various fees or how they categorize
them. You may see fees for plan administration, recordkeeping,
participant education services, compliance testing, investment
management, participant transactions, etc. Some service
providers may have a service model where services are itemized
and priced separately, while other service providers may bundle
several services together for one fee.
REVIEWING PLAN SERVICES
NAVIGATING
COST CONSIDERATIONS
EVALUATING
REASONABLENESS
ADDRESSING
PARTICIPANT QUESTIONS
GLOSSARY OF TERMS
With the new ERISA 408(b)(2) disclosure regulation, certain
service providers must disclose all compensation they expect
to receive as a result of providing services to the plan. This
includes a requirement to disclose revenue sharing amounts
as well as their fee specifically for recordkeeping services. The
goal of this requirement is to help the plan fiduciary (usually
the plan sponsor) understand the cost of the recordkeeping
services being provided to the plan, even though some or all of
that cost may be paid through revenue sharing from the plan’s
investment options (See Collection Method Flexibility with
Share Classes).
While the regulation defines “recordkeeping services”, it does so
in broad terms and different service providers tend to apply that
definition to their services in different ways. This in turn impacts
the amount they disclose as their recordkeeping fee. As a result,
it may be like comparing apples to oranges when comparing
recordkeeping fees of different providers.
1.52%
1.60
1.40
1.20
1.00
.80
.60
.40
.20
0
0.79%
1.35%
0.54%
0.38%
0.35%
PROVIDER A
0.46%
0.35%
PROVIDER B
This example is for illustrative purposes only.
While it is useful to be aware and understand fee
components like recordkeeping fees and investmentrelated
fees, it is more important to determine and
understand the overall fees being paid for your
retirement plan – the total cost.
1.46%
0.49%
Investment
Management
Recordkeeping
& Administration
0.62%
0.35%
PROVIDER C
Financial
Professional
Compensation
0.27%
RETIREMENT PLAN VALUE
MAIN
TOOLS & RESOURCES
> BACK TO HOME
TOTAL COST
COLLECTION
METHOD
PASSIVE VS.ACTIVE
FIXED RATE FEES
ERISA BUDGET
MORE THAN A NUMBER • NAVIGATING COST CONSIDERATIONS | 5
Assessing Retirement Plan Value

Table of Contents for the Digital Edition of Assessing Retirement Plan Value
