Qualified Retirement Plan
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Evaluating Retirement Plans Fees
Fees associated with qualified retirement plans may be structured in any number of ways.

In order to properly evaluate all fees and costs associated with the sponsorship of a plan, a plan sponsor must evaluate the fees charged by an up-front fee schedule as well as charges associated with investments. Asset fees, such as wrap fees, are based upon the value of the plan's investments and are deducted annually from the plan.

The employer will typically pay fees and costs as set forth in a contract or fee schedule. These charges may include the following:

  • Plan Document Fee/Submission Fees
  • Annual Administration Fee (compliance testing, IRS returns, etc.)
  • Recordkeeping Fees (asset recordkeeping, participant statements)
  • Transactions Fees (distributions, loans, QDRO's, etc.)
The fees & costs paid by the employer for sponsorship of a qualified retirement plan are generally deductible by the employer as a business expense. Plan participants will typically pay fees on a transaction basis and/or annual fees related to investments. (Some brokerage firms may offset a portion of employer fees listed above, as participant fees related to investments)
  • Asset fees (i.e. wrap fees, based on the value of the assets)
  • Mutual Fund management expense fees (i.e. annual expense ratios)
  • Mutual Fund sales charges (i.e. Loads, front end/deferred sales charges)
  • Broker commissions/transactions fees
  • Annuity/insurance premiums.
  • Recordkeeping charges (based on the # of participants)
Mutual Fund management fees and sales charges are disclosed publicly in mutual fund prospectus. This information is available by contacting the mutual fund company directly or accessing public information Internet sites such as morningstar, etc. Assets fees such as wrap charges are disclosed in the asset contract.

In order to properly evaluate the cost of the plan, the following considerations should be addressed:

  • Does the brokerage firm pass along employer costs to plan participants as mutual fund management fees?
  • Does the firm charge a fee based upon value of the assets in the plan? (wrap fees, assets charges)
  • What does the investment firm charge for removing funds or making changes to investment portfolios? (i.e. termination fees, back-end sales charges)
  • What does the investment firm charge for routine transactions such as deposits of deferrals and loan payments?
  • What does the investment firm charge up-front sales charges or transactions fees for segregated participant accounts? (i.e. loads or commissions)
  • For bundled services, to what extent does the investment firm provide services other than the recordkeeping? Do they provide annual administration services such as document services, compliance testing, consulting on compliance and tax return preparation?
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