Revisiting 2012's Retirement Plan Fee Disclosure

Are your retirement plan fees clearly identified and understandable? They should be. Thanks to the not-so-new 2012 fee disclosure rules, the curtain was pulled on all retirement plan related fees. Knowing exactly what you were paying was sometimes a mystery, so disclosure reform was needed. Having the newly disclosed information fixed the confusion, right? Not exactly. Taking a fee schedule and applying it to your plan can still prove to be a challenge. I call it “scuba diving in the 401k fee swamp”.

When doing a plan review for a client, we show each itemized fee totaled into an all-in cost. What’s the bottom line? When shopping for a car, your eye immediately finds the bottom line price when looking at the window sticker, and retirement plans are no different. An all-in cost makes it easier to compare your fees against a competing quote or a benchmark.

Why is periodically benchmarking your plan fees important? Simple; the retirement plan business is competitive and fees can widely vary. So, if you’ve had the same fee schedule for the last 3+ years, it’s likely your current provider has revised their current fee schedule more favorably. Their new clients may be getting a better deal than you.

EXAMPLE:
Using our current pricing model, we would quote a plan with 50 participants and $1.25 million in assets at 0.85% all-in. This is based on the industry’s most common investment allocation.

By comparison, www.401ksource.com shows the average all-in fee being 1.51% for the same plan (a difference of $8,250 annual savings).

If you haven’t reviewed your current retirement plan in the last 3 to 5 years, now may be the time. Contact one of our Retirement Plan Advisors to get started on a review today.

Source: 401k Average Book – 2018 Edition

 

Kris Feldmeyer, Vice President/Retirement Plan Advisor

First Merchants Private Wealth Advisors products are not FDIC insured, are not deposits of First Merchants Bank, are not guaranteed by any federal government agency, and may lose value. Investments are not guaranteed by First Merchants Bank and are not insured by any government agency. This material has been prepared solely for informational purposes. First Merchants shall not be liable for any errors or delays in the data or information, or for any actions taken in reliance thereon. Any views or opinions in this message are solely those of the author and do not necessarily represent those of the organization.