Recordkeeping Fees

[Kent]

Hello,

What are you paying for specific recordkeeping services? I've found a lot of information in total but not for specific services. We are currently going through a benchmarking fee review however everything is in total. I was just wondering what different plans are paying for the specific services listed below.

Per participant fee

Trustee fee

Managed/unitized Accounts

Participant services:

- Distributions

- Hardship processing

- Loan origination

- Annual loan maintenance

[Bird]

Those fees are really all over the place. Some charge a flat percentage of assets, some charge a direct base fee, some waive fees if all assets are held by the custodian, some charge a direct base fee plus a per participant fee, maybe minus a credit based on assets. Which one is "best" depends on your situation - number of participants, average assets, etc.

Are you a plan sponsor?

[Kent]

Yes,

We are being charged a base fee ($1500) plus a participant fee ($50/per).

The trustee fee we are charged is 2.5bps on total assets. (1200 people/ $210M)

I'm particular interested what other plans are paying or the per participant fee and the trustee fee. Our benchmark report does not go into that much detail.

[Bird]

I'll let others respond; I'm a TPA and your plan is way bigger than my typical or even largest one and I'm afraid that pricing for my recordkeeping partners wouldn't apply to a plan of that size.

[ESOP Guy]

What kind of plan are we talking about here? A DB, 401(k), ESOP????

That could make a pretty big difference.

However, if I am doing my math right your are paying around $114,000/year for this plan-- is that correct?

[Kent]

We are a Profit Sharing 401(k) plan that is not self directed.

You are correct total recordkeeping costs are $114K.

[WCC]

Our benchmark report does not go into that much detail.

Is that benchmark report from your recordkeeper or your advisory/consulting firm? If you are using a specialized qualified plan advisor, he/she should have access to benchmark tools that would compare your plan data and demographics to other plans similar in size. For example, there are reporting tools that would show what quartile your fees sit in for the costs you listed above. I think it will be hard to get a good comparison unless a data reporting tool is used. Do any of your funds pay revenue sharing? That will also impact the fee comparison.

[Kent]

The benchmark report is through our advisory/consulting firm, they are using a Fiduciary Benchmarks report. We went back to Fiduciary Benchmarks and requested more detailed information on the specific recordkeeping services. They came back and said they didn't have that level of detail available at this time...

No revenue sharing.

[ESOP Guy]

One of my former employers (A very large benefits/human resources consulting firm) used to offer as a service taking your business out to bid and helping you review the bids to find the right service provider. They also did work on those size plans. (They never allowed their own firm to bid on the project if they were consulting).

One can't know for sure without details but that price tag sounds high for a 1,200 life plan.

You might want to put it out for some RFPs just to see what happens with or without a consulting firm helping you. Hope I am not offending my fellow TPAs out there by saying that.