We keep our pricing very simple - not to mention, reasonable - and do not charge extra when clients choose to include or exclude any of our plan design features (see our Plan Design & Order sections). There are only three components to our fee schedule:
|LifeCycle 401k ANNUAL FEES|
|Plan Size||Annual Fee|
|One-person plan (+ spouse)||$495 per year|
|2-4 eligible employees||$695 per year|
|5-10 eligible employees||$895 per year|
|11-15 eligible employees||$995 per year|
|16-20 eligible employees||$1,295 per year|
|21-25 eligible employees||$1,595 per year|
|26-30 eligible employees||$1,795 per year|
|31-35 eligible employees||$1,995 per year|
|36-40 eligible employees||$2,195 per year|
|41-45 eligible employees||$2,395 per year|
|46-50 eligible employees||$2,595 per year|
|more than 50 eligible employees||$2,595 per year + $200 per year per each additional 5 eligible employees|
|*All new clients are charged a $595 plan set-up fee. This set-up fee is charged one time only, in the first year of service. The pricing above is for the first year of service only. Renewal fees may be adjusted; no set-up fees charged in subsequent years.|
Many 401k plans contain significant hidden fees. This is especially true of 401k plans offered to small companies, where it is easier to hide fees from small business owners, who are busy running their businesses and do not have the time or staff to review all the legal mumbo-jumbo of setting up a new plan or reviewing plan documents.
These hidden fees are being lifted from the back pockets of 401k plan participants. The US Department of Labor is trying to force 401k plan providers (banks, mutual fund companies, insurance companies, brokerages, etc.) to come clean about these hidden fees. But there is significant lobbying power at play to stymie the government's effort to force comprehensive 401k fee disclosure.
Here are the facts:
According to a recent study by the ICI (Investment Company Institute) and Deloitte titled, "Defined Contribution / 401(k) Fee Study". the average 401k plan has hidden fees of 0.72% per year. That may not seem like much, but it costs the average participant about $11,000 in hidden fees for the lifetime of his or her 401k. These fees are extracted directly from the 401k participant's account. In their study, ICI and Deloitte call these hidden fees "all-in" fees. The average hidden "all-in" fee of 0.72% equates to $350 per year, extracted from participants' accounts.
For small 401k plans that cover less than 20 employees and less than $1 million in total assets, the hidden "all-in" fee situation is much worse. For small 401k plan participants, hidden "all-in" fees can jump from 0.79% to a whopping 1.89%, or up to $920 per plan participant per year! For small plan participants, this can mean paying an astounding $28,000 in hidden fees for the lifetime of his or her 401k. See pages 6, 16, 19 and 20 of ICI/ Deloitte report by clicking the report cover. If you are selecting a 401k for your employees, did you know they could be unknowingly losing $350 to $920 a year in hidden fees?
In most 401k plans, large and small, the employer pays the 401k plan's annual record keeping fees. These fees vary; below is a representative sample of annual record keeping fees:
|401k fees for a company with 15 employees & $1 million in assets...|
|The Online 401k||(www.theonline401k.com)||=||$1,100|
|...and how prices skyrocket when the "all-in" and hidden fees are disclosed...|
|LifeCycle 401k||:||$995 + [No hidden "all-in" fees]||=||$995 per year complete!|
|The Online 401k||:||$1,100 + ["all-in" fee of 0.72% to 1.89% of $1 million]||=||$8,300 to $20,000 per year|
|Wellington 401k||:||$1,350 + ["all-in" fee of 0.72% to 1.89% of $1 million]||=||$8,550 to $20,250 per year|
|Employee Fiduciary||:||$1,500 + ["all-in" fee of 0.72% to 1.89% of $1 million]||=||$8,700 to $20,400 per year|
|Sharebuilder 401k||:||$1,800 + ["all-in" fee of 0.72% to 1.89% of $1 million]||=||$9,000 to $20,700 per year|
So it's not rocket science to understand why many plan providers in the 401k industry are blowing smoke to make any discussion about hidden or "all in" 401k fees confusing and bewildering. There is a great deal of money at stake, and all this smoke clouds the fact that many small employers are unknowingly offering their employees 401k plans laden with hidden fees.
Hidden and "all-in" 401k fees are getting noticed by the news media and the legal profession via class-action law suits, and some 401k plan providers that made fortunes mining hidden fees are now scrambling to cover their tracks. They are generating the kind of PR confusion many of us remember from years past, when major tobacco companies tried to explain to Americans that smoking was not hazardous their health. Many in the 401k industry are launching the same kind of PR assault, confusing and clouding the issue, but what is really at stake is the end of their 401k hidden fee gravy train, pure and simple.
Apologies for the repetition. We simply want to be clear that the above annual fees really are all-inclusive.
LifeCycle 401k plan design options include:
Visit our Order & Customization page to view the exact choices currently available under each of these plan design options.
The US Labor Department is currently auditing 401k plans of all sizes because of a trend that may violate current pension laws. Many companies, especially smaller businesses, are shifting plan administrative expenses to plan participants, knowingly or unknowingly. This shift of plan expenses comes in the form of "hidden fees" that are routinely deducted from each participant's retirement savings by some plan providers and mutual funds. Because of lax reporting requirements, no one really knows how much money changes hands behind the scenes, but it is estimated that excessive fees may be as much as $1.5 billion per year, and growing.
In the 401k arena, expense fee disclosure, whether to plan participants or plan sponsors, has been notoriously confusing and unclear. The impact of these confusing hidden fees on plan participants' retirement accounts can be very significant over time. As example, consider a hypothetical 401k investment such as a mutual fund, with deducted expense fees of 1.3 percent versus one with fees of just .3 percent. Applied to an initial 401k investment of $5,000, with regular annual investments of $5,000 returning 10 percent, and compounded over 15 years, the difference between the 'low-fee' investment and the 'high-fee' investment adds up to $15,398. That's a significant sum deducted from a participant's retirement savings.
Policymakers and plan sponsors seeking to structure well-managed 401ks for their aging workforces are beginning to acknowledge the negative impact hidden fees has on eroding pension accumulations for retirement. What might appear to be a small difference in deducted investment fees can result in substantial differences in eventual retirement benefits.
We do not accept any rebates or revenue sharing of fees deducted from our clients' plan assets unless those fees can be returned to the plan or used to offset plan expenses. Entities that provide and support 401k plan investments include mutual funds managers, fund distributors, asset custodians, asset trustees, investment brokers and advisors, and plan administrators and record-keepers. These entities typically earn at least a portion of their compensation from asset-based fees deducted from plan assets.
LifeCycle 401k is the exception to the norm. We do not earn any compensation, either directly or indirectly, from our clients' 401k plan assets. If rebates are offered, we have the rebates returned to the client or directly applied to reducing our clients' costs. Our published prices are the only net compensation we collect.
Asset-based fees are an unavoidable fact of life if your company is using mutual funds (including institutional mutual funds) or self-directed brokerage accounts. The cost of these asset-based fees must be included when determining the true, overall cost of a 401k plan.
For more information about asset-based fees, we recommend reading "Revenue Sharing in the 401K) Marketplace-Whose Money Is It?" by The McHenry Consulting Group and "Study of 401k Plan Fees and Expenses" by the US Department of Pension Welfare and Benefits.
We set-up a special website (www.401kfundslookup.com) to help explain and partially satisfy the 401k service provider fee and 401k investments fee disclosure requirements under ERISA 408(b)(2).
The information in this special website assists plan participants in both understanding the impact fees have on their 401k, and making informed investment decisions.
Your current 401k provider may charge plan termination fees, as it likely has some administrative expenses involved with closing down your existing plan. Contact your current plan provider to learn about any plan termination fees.
You can view all the plan design options available with LifeCycle 401k by scanning through our Conversion Plans Order Form. If you have specific questions, contact us or submit a Conversion Plan Order Form and mark "Unsure. Please contact..." as applicable. Submitting an order form is the most expedient way for us to serve you, even if all you want at the moment is answers to conversion-related questions, because the order form collects pertinent information we likely need to answer your questions. Submitting an order form IN NO WAY obligates you to actually placing an order - no money changes hands - but the form does gather the data we need to accurately answer your 401k-related questions. Oh, and of course we do NOT share your data with any party.
LifeCycle 401k includes:
Our IRS-approved prototype 401k plan is replete with 401k plan design options that allow you to create the 401k you and your employees will call a true benefit.
We customize our powerful yet easy-to-use web-based 401k plan administration and participation systems to the plan design and administration choices you make. The customization information works in conjunction with the up-to-date IRS and other governing regulations programmed into the online software to streamline your 401k's operation while keeping you apprised of your plan's health and growing wealth.
You receive free, professional help with understanding your 401k plan design and management options as well as with running your plan via LifeCycle 401k. Context-sensitive onscreen help plus additional online and printed materials are right at hand. Additional free as well as fee-based support is also available. We even provide free help with preparing federal reporting forms regarding your 401k plan and with meeting required ERISA requirements (which is easy when using LifeCycle 401k, as the system takes care of things for you). Visit our Support page for more information.
LifeCycle 401k lets you choose both the investment approach (no-load mutual fund families, including no-load institutional mutual fund families, and/or self-directed brokerage accounts) and the specific investment provider(s) for your 401k plan. No other 401k plan offers greater investment flexibility. Visit our Investments pages for specifics, including listings of potential investments.
Our online plan-specific 401k participation and employee education forms and materials explain 401k concepts (401k loans, 401k enrollment, 401k investing, etc.) to your employees while gathering the data needed for you to run your company plan.
As mentioned above, we help out with the federal reporting regarding your 401k plan. Our 401k FedForms website (www.401kfedforms.com) explains which federal reporting forms are relevant to your particular 401k plan shows annotated versions of each relevant Form or Schedule (Form 5500, 1099-R, etc.) so you know exactly where within your 401k software to locate needed information, and even includes ready-to-complete Summary Annual Report PDF that take just moments to fill in.
Our goal at LifeCycle 401k is to ensure that all our clients and their employees have 401k plans they feel good about. If your company purchases LifeCycle 401k and then down the road decides the self-service administrative approach is not the right approach for you, give us a call: We can convert your LifeCycle 401k plan into a traditional, full-service plan that will still allow for 24/7 online access for plan participation but with professionals handing the plan administration for you.
According to HR Investment Consultants in Towson, MD, publisher of the "401k Provider Directory, "the cost of running a 401k plan with 25 participants and $750,000 in assets can range from as little as $6,750 per year to as much as $20,000, depending on which 401k vendor you select." (Sources: Nation's Business, September 1998, Myers, Randy "Your 401k Plan May Cost You Too Much," Business Week Online, July 2000, Brenner, Lynn "A Wealth of Choices.")
We compared the cost of a complete, fully-customized LifeCycle 401k system with the cost of bundled 401k plans offered by a broad cross-section of major national vendors that allow for no-load mutual fund families (including no-load institutional mutual fund families) and/or self-directed discount brokerage accounts as 401k investments.
The charts below maps out some price comparisons for 20 - person plans. We did not even bother mapping LifeCycle 401k's smallest plans - those serving fewer than 20 employees - because in the very small plan arena LifeCycle 401k is so, so far more cost-effective than the competition, that we didn't feel the comparisons worth bothering.
|LifeCycle 401k v. OTHER 401Ks MARKETED TO SMALL BUSINESSES|
|BASELINE ANNUAL FEE||LifeCycle 401k||The Online 401(k)||EZ401||Fidelity e401k||Intuit Unplug 401(k)||Principal Impact Plus|
|20 PERSON PLAN||$1,295 per year
$595 setup fee
|$2,580 per year
$1,000 setup fee
|$2,520 per year ($1800 annual fee + $36/partic. fee)
$401 setup fee
|$2,350 per year (annual fee = $1750 annual fee + $30/partic. fee)
$750 setup fee
|$2,040 per year ($1320 annual fee + $36/partic. fee)
$1,000 setup fee
|$2,300 per year ($1700 annual fee + $30/partic. fee)
$500 setup fee
|INVESTMENT OPTIONS||LifeCycle 401k||The Online 401(k)||EZ401||Fidelity e401k||Intuit Unplug 401(k)||Principal Impact Plus|
|UNLIMITED selection of no-load funds, INCLUDING ACCESS TO Fidelity Funds and Vanguard Funds, or self-directed brokerage accounts. No hidden fees or charges||Limited investment selection, with no access to Fidelity Funds or Vanguard Funds. Extra charges for self-directed brokerage accounts||Prepackaged investments; investment fees may apply (in addition to normal asset-based fees)||Fidelity Funds investments only||Limited investment choices. Prepackaged mutual funds with approx. average expense ratio of 1.5% in addition to fund fees and costs.||Principal Funds only|
|CONVERSION PLAN FEE||LifeCycle 401k||The Online 401(k)||EZ401||Fidelity e401k||Intuit Unplug 401(k)||Principal Impact Plus|
|$500 (on average)||$1,495||$xx||$1,000||(not listed)||(not listed)|
|ANNUAL LOAN FEE||LifeCycle 401k||The Online 401(k)||EZ401||Fidelity e401k||Intuit Unplug 401(k)||Principal Impact Plus|
|none||$95 per loan||$125 per loan||$75 per loan||(not listed)||$40 per loan + $8 per quarter (latter paid by the plan participant)|
|DISTRIBUTION FEE||LifeCycle 401k||The Online 401(k)||EZ401||Fidelity e401k||Intuit Unplug 401(k)||Principal Impact Plus|
|$30 per distribution||$95 per distribution||$100 per distribution||$25 per distribution||(not listed)||(not listed|
|ESTIMATED HIDDEN FEES (charged against plan assets)||LifeCycle 401k||The Online 401(k)||EZ401||Fidelity e401k||Intuit Unplug 401(k)||Principal Impact Plus|
|Plan Assets of $250,000||$0||$3,750 per yr||$3,750 per yr||$3,750 per yr||$3,750 per yr||$3,750 per yr|
|Plan Assets of $1,000,000||$0||$15,000 per yr||$15,000 per yr||$15,000 per yr||$15,000 per yr||$15,000 per yr|
|NOTES||LifeCycle 401k||The Online 401(k)||EZ401||Fidelity e401k||Intuit Unplug 401(k)||Principal Impact Plus|
|No hidden fees or commissions||Possible hidden fees/costs||Investment fees may apply (in addition to any normal asset-based fees)||Nondiscrimination testing fee of up to $1,000 (fee contingent upon plan design)||Hidden investment fees/costs; $150 per plan amendment||Hidden investment fees/costs|
|SETUP FEES (ONE-TIME CHARGES AT THE PLAN'S OUTSET)|
|New Plan Fee - Baseline Component||$595||$|
|New Plan Fee - Per-Participant Component||none||$|
|Conversion Plan Fee (in addition to the above New Plan Fee)||$500 or less (depends on plan size + conversion complexity)||$|
|Federal Document Filing Fee||none||$|
|ANNUAL FEE - BASED ON PLAN ASSETS|
|ANNUAL FEE - BASED ON PLAN SIZE|
|1 Eligible Employee (plus spouse)||$495||$|
|2-4 Eligible Employees||$695||$|
|5-10 Eligible Employees||$895||$|
|11-15 Eligible Employees||$995||$|
|16-20 Eligible Employees||$1,295||$|
|21-25 Eligible Employees||$1,595||$|
|26-30 Eligible Employees||$1,795||$|
|31-35 Eligible Employees||$1,995||$|
|36-40 Eligible Employees||$2,195||$|
|41-45 Eligible Employees||$2,395||$|
|46-50 Eligible Employees||$2,595||$|
|annual "per participant" fee||none||$|
|Annuity Contract Administration Fee||none||$|
|Daily Valuing and Updating of Account Balances||none||$|
|Distribution Processing Fee||$30||$|
|Loan Origination Fee||$30||$|
|Loan Tracking Fee||
|Participant Statement and/or Balance Inquiry Fee||none||$|
|Payroll Processing Fee||none||$|
|Trust-To-Trust Investment Transfer Fees||none||$|
|PLAN COMPLIANCE & TESTING SERVICES|
|ANNUAL TAX REPORTING|
|IRS Form 5500 Information||none||$|
|Annual Audit Report||none||$|
|PLAN DOCUMENT AMENDMENT FEE|
|Mandatory Plan Amendment Fees||none||$|
|Plan Document Determination Letter Fee||none||$|
|Plan Transfer Fees||none||$|
|INVESTMENT OPTION FEES|
|Access to Brokerage Window||none||$|
|Back-End Load Mutual Funds Commissions||none||$|
|Front-End Load Mutual Fund Commissions||none||$|
|No-Load (Commission-Free) Mutual Funds||none||$|
|INVESTMENT MANAGEMENT EXPENSE RATIO|
|Equity Funds (No-Load)||20 BPS per year||$|
|Bond Funds (No-Load)||15 BPS per year||$|
|Specialty Funds (No-Load)||40 BPS per year||$|
|Average Expense Ratios of No-Load Funds||25 BPS per year||$|
|"HIDDEN" EMBEDDED INVESTMENT EXPENSES|
|Fund Turnover Charges||none||$|
|Sales Loads and Commissions||none||$|
|Sub-Transfer Agent (Sub-TA) Fee||none||$|
|Annuity Termination Charges||none||$|