401(k) Plan Fees

Fees for a 401(k) Plan typically fall into two categories: Plan Sponsor fees and Participant fees.

 

Plan Sponsor fees include:

 

  • Document Fees: Expense for creating and maintaining the document, creating summary plan description, mandatory amendments
  • Administrative Fees: Expense for filing annual tax documents, possible annual testing, participant loan processing, hardships, distributions, etc.
  • Recordkeeping Fees: Expense for keeping track of separate participant accounts, allocation of contributions, cost of sending statements (these are sometimes passed along to participants)

 

Comparing Plan Sponsor fees is very difficult, as some companies will say that one item is free, or it is masked inside other revenue sharing agreements.

 

Participant Fees include:

 

  • Investment Company Fee: These expenses are charged by the parent company as their profit on the plan
  • Advisor Fee: The amount that is added on for the advisor that is on the account, for the work that they do to help with enrollment of new employees, investment education and for being a source for participants questions.
  • Subaccount Fee: this is charged by the investment firm to make the decisions on the individual securities (stocks, bonds) held within the subaccounts.

 

These fees are all taken from the participant accounts, usually on a daily basis as a percentage of the return.  Because these fees need to be disclosed to participants, they are a little more transparent.  They are often combined in reports for simplicity.

 

If you have not compared fees with different recordkeepers lately, it may be worth your while to do it.  Because of disclosure rules, many providers have lowered fees to become more competitive to get business.  It is also very difficult, for providers to raise fees, so a fee reduction would be long lasting.

 

We would be interested in giving you a comparative bid for your 401(k) Plan.  Because of our combined services, we believe we are often very competitive and strive to provide a higher level of service.  Give us a call!

 

To get started, contact us today.