What are Fees?
Generally there are three types of fees:
1. General administrative services: These are the fees associated with the day-to-day operations of the plan by the vendor (i.e. TIAA-CREF, Fidelity or VALIC). These operational fees are for recordkeeping, accounting and legal services and customer service support provided by phone or via the website as well as participant communication.
2. Personalized services: These services are plan specific and may apply to such services like loans.
3. Investment Services: These fees represents the largest portion of a plans’ costs and you pay the fees only for the investments you actually use. These fees are not deducted directly from your account but are paid indirectly though an expense ratio.
An expense ratio is the percentage of assets an investment provider charges each year in exchange for its services. Their services include the expense to run the fund, accounting and legal fees, fund manager’s compensation and advertising.
As an example, an expense ratio of 1.5% means that each year 1.5% of the fund’s total assets are used to cover these expenses. Expense ratio is deducted from the fund’s assets-total return is “net” of these fees. Even small differences in fund expense ratios can become sizeable difference in returns over time.
Fees are an important component that should be considered when selecting investments in addition to performance and asset allocation because all impacts your retirement savings.
To help you with questions about the fee disclosure notices and to assist you with reaching your retirement financial goals, your retirement plan providers are available to provide professional advice for asset allocation and offer tools to help you in the process. Please contact them online, by phone or when they are on campus. Below is information on how to reach your vendor.
On campus Consulting schedule: http://www.usfca.edu/templates/hr_inside.aspx?id=2147493248&nav=2147485053
Additionally, if you have any questions, please contact firstname.lastname@example.org.