401(k) Fees

[Guest JSinbad]

We have 1900 participants in our plan. We pay $6.25 per participant, per quarter, a base fee of $375.00 per quarter, $6.25 per loan per quarter, a new loan setup fee of $75.00 and $550.00 annual fee for Non-Dicrimination services.

Does this see reasonable?

[LCARUSI]

I think for anyone to give you an accurate answer, you should if possible provide more information:

1) How are the Plan's assets invested?

2) Is the recordkeeper also the investment manager?

3) If the recordkeeper is not the investment manager, does the recordkeeper receive any subsidy from the investment manager based on the level of assets in the Plan?

4) What is the total Plan assets?

[Guest boetgerinc]

You are focusing on the obvious. Most plans beat-up their recordkeeper on fees, while everyone appears to be oblivious as to what fees they are being charged in their plan's investment vehicle.

If you are concerned about fees, start by finding out where / how your plan's assets are invested. Are you in an insurance product, are you paying a trustee, is there a broker involved? If you are using mutual funds get fund prospectuses. Find out if there are loads or surrender charges on your plan's assets.

There are so many ways that you can be charged on your trust assets, that you may not be able to determine all of the investment fees that your retirement fund is paying (compaired to recordkeeping fees which are usually easily outlined).

If you want to learn more, start by doing a "search" at this website on retirement plan fees. You will then have access to more articles than you will have time to read, however they will all be useful and thought provoking.

[Guest ESOPwizard]

1. Just curious: Does the fee for nondiscrimination testing cover

a 415 test? If not (and I've seen cases where it didn't), what else

did they not mention?

2. For that kind of nondiscrimination test fee, they are probably

relying on you to give them all sorts of accurate data. If you made

an obvious mistake, would they notice?

[Jon Chambers]

According to HR Investment consultants, plan costs for a 2,000 life plan with $60 million in assets range between $4 and $45 per year per participant for recordkeeping and administration, and between $0 and $27 per participant for loan administration. Total plan costs, the most important figure, for bundled services including trusteeship (including investment management, far and away the largest cost) average 1.10% of assets, or $656,950 per year. Investment management comprises $593,586 (90%) of this total. Total fees range from $290,498 to $1,534,400, with most of the variance attributable to different investment fee structures.

Your company is large enough to engage a consultant to do a customized benchmarking study to determine whether your fees and services are reasonable. This type of project should run a few thousand dollars, given a range of costs of more than $1 million annually, in our opinion, this is money well spent.

[Guest AKeith]

You seem to be paying substantially more than the market has to offer. For a plan with nearly 2,000 participants you should be looking at paying around $10 per employee per year at the most and this should include all discrimination and compliance testing as well as government reporting. This assumes that your plan has no special provisions such as employer stock, cross tested profit sharing contributions etc. Of course management fees for the mutual funds would need to be added and these can range from 0.5% up to 2% of the fund's assets annually.

Please let me know if you need anymore information and I can point you in the right direction.

[Guest TYounkin]

Keeping fees at a resonable amount is important. Be sure to check that the employees aren't paying excess fees also. You'll need to read all the prospectuses fee tables for that information. More about employees fees at my link below.

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http://www.geocities.com/CapitolHill/Congr...2077/links.html