Retirement Plan Fee Leveling

Plan Recordkeeping Fee

The Unitarian Universalist (UU) Organizations Retirement Plan is an IRS qualified 401(a)/401(k) defined contribution, multiple employer, church retirement plan. The plan’s recordkeeper maintains the records of participants’ accounts, and there is a cost associated with those recordkeeping services.

In a defined contribution retirement plan like ours, if fee-leveling is either not possible to operationalize or is not in place, then participants may bear the recordkeeping costs unevenly. This is due to the fact that the revenue sharing associated with different investment options in the plan may vary widely. For plans reliant on revenue sharing to fund recordkeeping fees, the investment selections participants make can determine the amount of the fee they bear.

Key Points:
  • Before fee-leveling, two participants with the same account balance, but with different investments, may have been paying different amounts towards recordkeeping even though they have the same access to recordkeeping services.
  • The UUA Retirement Plan Committee decided to move to a leveled-fee approach for funding the UU Organizations Retirement Plan recordkeeper fee so that each plan participant will more equitably bear the cost of recordkeeping services to which they both have access. An added benefit is that, with the fee-leveling approach, participants are arguably more likely to be aware of the fee they incur for recordkeeping costs.
Why Change Now?

TIAA, the Recordkeeper for the UU Organizations Retirement Plan, is now able to use a debit/credit approach to level the fees charged to our plan participants. This accounting mechanism helps to realize the goal of making recordkeeping fees more obvious and transparent to participants, as the fee debits and credits are posted on participants’ quarterly statements. Fee-leveling also eliminates a situation in which some of the plan’s participants essentially subsidize other participants’ recordkeeping costs.