a) Fidelity and TIAA both charge recordkeeping fees to cover accounting, recordkeeping, tax and other reporting, advisor communications, and other administrative fees and expenses associated with maintaining an account on each respective platform.
b) Also, each investment option offered within the Plan charges a fee for investment management and associated services. Plan participants generally pay for these costs through what is commonly called an expense ratio. Expense ratios are displayed as a percentage of assets. For instance, an expense ratio of 0.50% means a Plan participant would pay $50.00 annually for every $10,000 in assets. These investment fees are deducted directly from an investment option’s assets, thereby reducing its investment return. See the Fidelity
(Password:62919) and TIAA
(Plan no: 100990) notices for more information on the investments options
including expense ratios and fund performance.
c) Finally, some investment options may pay a portion of the expense ratio back to the record keeper to help offset the cost of plan administration. This revenue sharing will be paid directly to the participant investing in that specific option as a credit.