The Cost to Maintain a Retirement Plan
It is important to understand the fees and expenses associated with maintaining your retirement plan. MNDCP does not receive any financial support from the State of Minnesota or any participating governmental employers; therefore, plan participants share in the costs of plan services. MNDCP does not operate to make a profit. We only collect enough in fees to cover the cost to operate the plan.
Why Fees Matter
Plan fees are an important consideration because they lower potential returns. Ultimately, fees and expenses impact your account balance. Lower fees mean more of your account assets are available to be invested.
There are three types of fees participants typically pay to participate in a voluntary retirement plan.
The annual asset-based administrative fee is 0.10% (or one-tenth of 1%), which equates to $1 for every $1,000 account balance.
- The maximum annual fee is $125
- No charge on account balances over $125,000
- The fee is deducted pro rata from each investment option in your account on the middle of each month and is calculated on the average daily account balance for the prior 30-day period.
Example: For an account with an average monthly balance of $50,000, the administrative fee for that month would be $4.16
($50,000 x 0.0010 ÷ 12 months).
The fee supports administrative services such as website functionality, data entry and processing, systems architecture, payroll processing, tax reporting, participant education and counseling, access to Service Center Representatives, legal support, financial reporting and more.
All investment options have costs, which pay for investment management expenses.
To ensure plan participants benefit from low investment expenses, all MNDCP investment options are lower-cost investments such as institutional share class mutual funds, separately managed accounts or comingled investment trusts.
Investment expenses are subtracted from a funds rate of return/performance (not by MNDCP). A fund's rate of return is net of any investment expenses. The lower the investment expenses, the higher the funds rate or return/performance.
Investment expenses are disclosed monthly on the Investment Option Performance Report, shown as "Gross Fund Exp"
Dodge & Cox Income Fund
In lieu of lower cost investment, the Dodge & Cox Income Fund provides monetary reimbursements to investors. Dodge & Cox provides a quarterly share credit to fund investors. These credits increase an investors shares in the fund and, in turn, lowers the investment expense of the Dodge & Cox Income Fund.
The following fees apply if you elect any of these optional services.
Overnight mail fee – a $25 fee will be deducted, per occurrence, from the proceeds of a distribution.
Self-Directed Brokerage Account (SDBA) provided through TD Ameritrade offers thousands of mutual funds from which to choose, in addition to the core investment options offered by the Plan. Participants who use a SDBA pay a $2.50 monthly fee (deducted from an account balance) or $30 annually for the use of this service. This fee is in addition to any transaction fees TD Ameritrade charges and any expenses of the investments chosen within a SDBA. Contact TD Ameritrade at 1-866-766-4015 for more detailed SDBA fee information.1
My Total Retirement Advisory Services offered by Advised Assets Group, LLC (AAG), a federally registered investment adviser and wholly owned subsidiary of Great-West Life & Annuity Insurance Company. Interested participants delegate their account investment management to investment adviser professionals. The service uses a participant's Plan account balance, pension benefit (if applicable), social security and other savings information to develop and manage an investment strategy. The annual fee for this service is no more than 0.45%. Discounts apply for account balances over $100,000. The fee is deducted quarterly, directly from an account balance.2 More information can be found here.
1 Brokerage services provided by TD Ameritrade , Inc., member FINRA/SIPC, a subsidiary of the Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and the Toronto-Dominion Bank. All rights reserved. Used with permission. Additional information can be obtained by calling TD Ameritrade at 1-866-766-4015. TD Ameritrade and Empower Financial Services, Inc. are separate and unaffiliated.
2 Online advice and My Total Retirement are part of the Empower Advisory Services suite of services offered by Empower Advisory Group, LLC, a registered investment adviser.