Checklist for 401(k) Plan Fees

Ten questions to help you find out what fees and expenses go with your 401(k) plan.

Is there a checklist I can use to review my 401(k) plan’s fees?

There are an array of investment options and services offered under today’s 401(k) plans. While there is no easy way to calculate the fees and expenses paid by your 401(k) plan due to the number of variables involved, you can begin by asking yourself questions and, if you cannot find the answers, by asking your plan administrator. Answers to the following 10 questions will help in gathering information about the fees and expenses paid by your plan.

401(k) Fees Checklist

1. What investment options are offered under your company’s 401(k) plan?

2. Do you have all available documentation about the investment choices under your plan and the fees charged to your plan?

3. What types of investment education are available under your plan?

4. What arrangement is used to provide services under your plan (i.e., are any or all of the services or investment alternatives provided by a single provider)?

5. Do you and other participants use most or all of the optional services offered under your 401(k) plan, such as participant loan programs and insurance coverages?

6. If administrative services are paid separately from investment management fees, are they paid for by the plan, your employer or are they shared?

7. Are the investment options tracking an established market index or is there a higher level of investment management services being provided?

8. Do any of the investment options under your plan include sales charges (such as loads or commissions)?

9. Do any of the investment options under your plan include any fees related to specific investments, such as 12b-1 fees, insurance charges or surrender fees, and what do they cover?

10. Does your plan offer any special funds or special classes of stock (generally sold to larger group investors)?

This booklet is only the beginning of your educational process. You should ask questions and educate yourself about investments. Monitoring your current investment selections and reviewing the investment alternatives offered under your plan are part of a process that you, as an informed participant, will need to undertake continually.

Keep in mind that the law requires the fees charged to a 401(k) plan be “reasonable” rather than setting a specific level of fees that are permissible. Therefore, the reasonableness of fees must be determined in each case.

For additional information regarding the level of fees typically charged to 401(k) plans and 401(k) plan fees and expenses generally, see the Pension and Welfare Benefits Administration’s Study of 401(k) Plan Fees and Expenses, available on PWBA’s website at http://www.dol.gov/dol/pwba

In Conclusion ...

When you consider the fees in your 401(k) plan and their impact on your retirement income, remember that all services have costs. If your employer has selected a bundled program of services and investments, compare all services received with the total cost.

Remember, too, that higher investment management fees do not necessarily mean better performance. Nor is cheaper necessarily better. Compare the net returns relative to the risks among available investment options.

And, finally, don’t consider fees in a vacuum. They are only one part of the bigger picture including investment risk and returns and the extent and quality of services provided.

What other sources of information are available?

Listed below are some organizations and their Websites, phone numbers and publications that can help in your research.

From the Pension and Welfare Benefits Administration:Protect Your Pension: A Quick Reference GuideWhat You Should Know About Your Pension Rights

Website:Among the items available on PWBA's Website is Study of 401(k) Plan Fees and Expenses (available only on the Internet)http://www.dol.gov/dol/pwba

Toll-free Publication Hotline: 1-800-998-7542

From the Securities and Exchange Commission:What Every Investor Should KnowInvest Wisely - An Introduction to Mutual FundsAsk Questions - Questions You Should Ask About Your Investments ... and What To Do if You Run into Problems

Website: http://www.sec.gov

Toll-free phone information service: 1-800-732-0330

From the Board of Governors of the Federal Reserve System:Website: http://www.bog.frb.fed.us

From the Comptroller of the Currency:Website: http://www.occ.ustreas.gov/investmt.htm

From the American Savings Education Council (ASEC):Website: http://www.asec.org

Phone: (202) 775-9130

From the Certified Financial Planner Board of Standards:Website: http://www.cfp-board.org Phone: 888-CFP-MARK (toll-free)

From the National Association of Securities Dealers, Inc.:Website: http://www.investor.NASD.com