Fees and expenses have always been part of a retirement savings plan–some fees are associated with the administration of the plan and may be covered by your employer, while others are paid by you based on the specific investments and services you choose. Generally, there are three types of costs:
- General Administrative Services The day-to-day operation of a retirement savings plan requires administrative support to keep the plan running. Costs for services like recordkeeping, accounting, legal and trustee services, customer service support and participant communications may or may not be covered by your employer.
- Personalized Services Personalized service fees apply to specific services that you request. For example, if your plan allows for loans and you apply for one, you may pay a one-time loan initiation fee and/or annual loan maintenance charges. These fees are charged directly to your account, if and when you use the service.
- Specific Investment Services Investment expenses typically represent the largest portion of a plan’s cost and each investment offered within a plan charges a fee for managing and operating the investment. You pay these fees only for those investments you actually use and in proportion to the amount of your investment. These fees are not deducted directly from your account; you pay them indirectly through what is known as an expense ratio.
|Type of fee||General Administrative Services||Personalized Services||Specific Investment Services|
|What it covers||Costs of running a fund, like: |
|Who pays||In some cases, your plan; in some cases, it is shared.||Usually the participant if and when services are requested.||Deducted from a fund’s assets, resulting in a reduction in the fund’s return.|