There are two primary categories of costs associated with operating any retirement plan: investment fees and administrative fees.
Investment fees are generally the largest component of plan expense. These typically include transaction costs for buying and selling shares and underlying holdings, investor and account maintenance, and related costs associated with day-to-day management of each fund.
Investment fees are often stated as a percentage of the plan assets that are invested in the fund and are netted from each fund’s underlying market return.
Depending on the fund selected, CRA plan investment fees currently range from 0.02% to 0.96% — but note that these may vary over time.
Administrative fees encompass a wider breadth of plan services and features inherent to the day-to-day operation of the plan. These include transactional activity and account administration, plan advisory services, audit and other regulatory expenses, as well as plan features and tools.
Each of these fee types call for continual monitoring and adjustment to ensure that the plans we offer and administer provide valuable servicing at a reasonable cost.
To that end, CRA’s Board of Directors has set administrative fees for our plans at 0.25% of account value. There is a $28 minimum fee and a fee cap (the maximum amount considered as a basis for fees, as adjusted for 2020) set to $400,000 per employee participant. While the fee cap for 2020 reflects a change from prior years, the adjusted rate remains highly competitive as compared to other similar retirement plans available in the market. In fact, most other plans have no fee cap.
These fees do not cover additional ancillary costs incurred by plan participants, such as distribution fees, self-directed brokerage accounts, Empower Advisory Services, etc.