Pub. 1 2010 Issue 1

spring 2010 13 Pentegra Retirement Services offers retirement plan solutions endorsed by the WVBA. For more information on Pentegra’s retirement programs and plan design consulting services, contact Mark Hogan, Regional Marketing Director at mhogan@pentegra.com or 800-872-3473, ext. 579. Cost transparency With retirement plan investing, it’s not what you make, but what you keep. Apart from fees charged for administration of the plan itself, there are fees that may be charged in connection with plan investments. Sales charges are basically transaction costs for the buying and selling of shares. These charges may be paid when you invest in a fund (known as a front-end load) or when you sell shares (known as a back-end load, deferred sales charge or redemp- tion fee). A front-end load is deducted up front and, therefore, reduces the amount of your initial investment. A back-end load is determined by how long you keep your investment. There are various types of back-end loads, including some which de- crease and eventually disappear over time. A back-end load is paid when the shares are sold (i.e., if you decide to sell a fund share when a back-end load is in effect, you will be charged the load). These fees are typically charged to offset commissions paid to brokers. Mutual funds also may charge 12b-1 fees, which are ongo- ing fees paid out of fund assets. 12b-1 fees may be used to pay commissions to brokers and other salespersons, to pay for advertising and other costs of promoting the fund to investors and to pay various service providers to a 401(k) plan pursuant to a bundled services arrangement. They are usually between 0.25 percent and 1.00 percent of assets annually. Management fees are ongoing charges for managing the assets of the investment fund. They are generally stated as a percent- age of the amount of assets invested in the fund. Sometimes management fees may be used to cover administrative ex- penses. Management fees can vary widely, depending on the investment manager and the nature of the investment product. Surrender and transfer charges are fees an insurance company may charge when an employer terminates a variable annuity contract) before the term of the contract expires. This fee may be imposed if these events occur before the expiration of a stated period and commonly decrease and disappear over time. It is similar to an early withdrawal penalty on a bank certifi- cate of deposit or to a back-end load or redemption fee charged by some mutual funds. The bottom line—look for funds with low expense ratios and understand your total transaction costs. Total retirement solution Seek providers who approach plan design as a total retire- ment solution, and have the ability to offer defined benefit, defined contribution and nonqualified plans. An integrated approach means that all the information you and your employees need is available through a single provider, sim- plifying information access for you and your staff. Does the provider have a team of in-house retirement benefits experts (ERISA attorneys, actuaries, benefits consultants, invest- ment managers and education specialists) available on a direct access basis? Is this a standard part of the product offering or is there an additional cost for these services? Q Look for providers who can deliver: • Coordinated plan enrollment, conversion and implementation • A single point of contact for plan administration • Integrated plan reviews & communications • Across the board plan design changes and amendments • A single Internet site with access to consolidated plan information • Comprehensive compliance testing across all plans.