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There has been a groundswell of support within Congress for greater transparency of participant fees within 401(k) and 403(b) retirement plans. Last year the House and Senate introduced three different legislative proposals (e.g., H.R. 2779, H.R. 2989 and S. 401) requiring employers to disclose the total cost of participating in an employer-provided retirement plan. This action will be welcomed by retirement plan participants who have struggled to determine the total cost of investing in a company-sponsored plan. The various fees and expenses incurred by retirement plan participants are investment management, brokerage, recordkeeping and plan administration. These fees often must be gathered from a variety of sources in dollars, percentages, or as a formula. Searching through the myriad of fees and expenses and combining these figures into a realistic number can be quite time-consuming, if not impossible, for the average participant. Sadly, it seems that the majority of employer-provided plans make no mention or disclosure of fees whatsoever.

 

While we are encouraged that the House and Senate are taking action regarding this issue, PCA Retirement & Benefits, Inc. (RBI) has not waited on Congress to begin a comprehensive disclosure of fees. Since 1990, RBI has provided participants with a single fee, disclosed as a percentage, for all expenses within each fund offered by the PCA Retirement Plan. This one figure, commonly referred to as the Total Expense Ratio, encompasses the amount participants annually pay for administration of the PCA Retirement Plan and the particular fund’s internal operating and management fees. To calculate the approximate annual expenses for any fund, participants would simply multiply their account balance by the Total Expense Ratio.

 

While the Total Expense Ratio was designed to be an all-inclusive fee measurement, we recognize that there are some limitations to this method of determining your actual plan expenses. So we worked with our business partners to develop a new accounting methodology that captures the plan administration and participant-services portion* of your total fee as a dollar amount. This figure includes RBI’s trustee fees, our retirement plan recordkeeper’s fee, our investment consultant’s fees, and (if applicable) participant-services fees (i.e., loan fees, distribution fees, etc.).

 

Our enhanced disclosure of plan administration and participant-services fees will be detailed in two places: 1) your quarterly statement and 2) your online retirement account. The fee disclosure can be found on the second page of your quarterly statement under the seventh column entitled “Fees.” Under that column, we note all participant-services expenses (i.e., loan fees, withdrawal fees, etc.) and plan administration expenses (i.e., RBI Trustee Fees, recordkeeping fees, etc.).

 

To find these expenses online, log on to our website at www.pcarbi.org. On the home page, click on the “log in” box located at the top of the page to go to the retirement account website. Enter your “user id” and “password” and click the “log in” button. Once you have entered your account, click on the activity summary module and scroll down the page until you see a row detailing your “fee”.

 

Please keep in mind that these are not new fees! The plan administration and participant-services expenses have always been a part of our plan. However since these fees were imbedded in your investment return, the expenses were not as easy to determine. That is no longer the case. We hope this new way of disclosing fees will help you make better informed cost-benefit decisions about our plan and your investments. Please contact us if you have any questions.