Fees 403(b) service providers charge include:
Administrative fees, which can cover services such as:
- record keeping for the plan;
- communications with participants;
- tracking individual contributions;
- reporting returns;
- trustee services;
- legal services; and
- audit services.
Fees for services incurred on an individual-participant basis, such as fees for processing a participant loan or distribution.
Investment-related fees, which are associated with:
- buying, selling and managing investments;
- embedded costs of plan administration;
- helping the plan sponsor select funds for the plan;
- helping the plan sponsor monitor investments; and
- managing investment fund assets.
Asset-based investment fees, which are a type of investment-related fee, and typically are the largest fees a participant will pay. Often called the expense ratio, this fee expresses the percentage of assets under management that is deducted each year for fund expenses.
Marketing and distribution fees, which include:
- commissions to brokers and other salespersons;
- advertising; and
- promoting the fund to investors.
Trading and transaction fees, which include commissions and other fees associated with an investment manager’s buying and selling of securities within a particular investment vehicle.
Wrap fees, which are aggregate fees that encompass multiple components, such as:
- investment management fees;
- surrender fees; and
- administrative expense fees.
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