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401k Plan Fees Are Important to All Participants

401k Plan Fees Are Important to All Participants

401k plan fees have a substantial impact on plan sponsors and plan participants alike.  Most, but not all, retirement plan fiduciaries have a good understanding of how fees impact participant account balances over time.   At the conclusion of a TPSU program held at held in Philadelphia, Pennsylvania, Fred Barstein, Founder and CEO of The Plan Sponsor University (TPSU), met with, Curtis, a Senior Manager with a public accounting firm which employs approximately 50 employees.  Curtis sits on the Retirement Committee for the organization and serves as a fiduciary to the plan.  Curtis stressed the fiduciary responsibility the company and committee have when overseeing the 401k Plan and the 401k plan fees.  Since the CEO serves as the Plan Administrator the retirement plan, the committee provides advice and direction to the Plan Administrator on a regular basis.  The organization maintains relationships with their TPA and their Retirement Advisor.  This is a case where the plan Partners and the Plan Committee work together to build a better plan for plan participants.

Full Transcript Here

Fred Barstein:
Fred Barstein with 401k TV just completed a TPSU program at the University of Pennsylvania. And I’m here with Curtis. Welcome, Curtis.

Curtis:
Thank you.

Fred Barstein:
Okay if we ask you a few questions?

Curtis:
Certainly.

Fred Barstein:
Very good. I wasn’t sure what you’re going to answer there. So before we do, just tell us a little bit about your role and how large your organization is.

Curtis:
Well, I am a senior manager at a 50 person public accounting firm.

Fred Barstein:
Public accounting, great. So today in your group came up, you talked about, we talked about your committee and what it does and it seems like it’s functioning very high level. So what does your committee do? What are some of the things that you cover?

Curtis:
So we have a pension committee that consists of five individuals across the different business lines.

Fred Barstein:
Sure.

Curtis:
And actually across different demographic groups as well.

Fred Barstein:
Yep.

Curtis:
And so the committee was formed, I would say primarily from the tone at the top. So our CEO is also the plan administrator of the plan. So he understands that there is some personal liability to having a plan that he has. And so he has brought this committee together to help manage his responsibilities.

Curtis:
And so our committee serves to give him advice on different matters that come up through our administration ,monitoring of the plan. So our plan has a TPA and we have a third party or third party administrator, but we have an advisor as well.

Fred Barstein:
Yep.

Curtis:
And we recently just went through a process of putting out our RFP and changing our advisor.

Fred Barstein:
Right.

Curtis:
And a lot of this was because of, really, fees. We had a participant come to us and says, Hey, I had an outside advisors tell us that Hey, our fees were a little higher than normal. And so we took a hard look at our fee structure and we agreed and we said it was time to make a change.

Curtis:
And so we spent a lot of time going out to different entities to identify a new plan advisor. And in doing that, we realize how difficult it is to really get down to who am I paying and how much am I paying? Is this a revenue sharing? Is there a flat fees associated with it?

Fred Barstein:
Right.

Curtis:
And when you go through this process, it’s so enlightening because every company has their own way of selling you their services. And you really have to spend a lot of time getting down to an apples to apples comparison to understand, okay, what am I getting? Is anything changing? Is this good for my participants? Is it bad for my participants?

Fred Barstein:
Right. Best interest.

Curtis:
Correct.

Fred Barstein:
And you’re an accounting firm. It was hard for you to figure it out. Imagine what the rest of us have to go through.

Curtis:
Well, their marketing is very, very clever.

Fred Barstein:
Very clever. So a final question ,Curtis. A couple of things you learned today that you may want to try to take back to your firm?

Curtis:
Well, I think that we can still do better at educating-

Fred Barstein:
Education, sure.

Curtis:
… our participants. I learned today that… We’ve talked a lot about doing a safe harbor and then one of the things we struggled with is increasing the deferral rate. And so maybe we’ll look at maybe doing a stretch-

Fred Barstein:
Stretch and match up.

Curtis:
Stretch match. And that’s one of the things I want to take back to our committee to consider. So very informative session.

Fred Barstein:
Very good. Well, thank you for your time today, Curtis, and thank you for watching 401k TV. Please stay tuned.

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