What are hard-dollar and soft-dollar expenses, and how do they impact your retirement plan? Allow us to explain.

Hard-dollar expenses typically include the expense of services such as plan design, plan design administration, and compliance.

These hard-dollar fees are usually paid to a third-party administrator (TPA) or a bundle provider, who performs both the record-keeping and the administrative services for your plan. These service providers also ensure that your plan stays in compliance with all Department of Labor and IRS guidelines.

Soft-dollar expenses, on the other hand, include investment management fees, distribution fees, sub-transfer fees, and asset base or wrap fees. These fees are generally paid by the participants through a mutual fund.

You can learn more about these fees by checking out our previous video, which covered revenue sharing. You can watch that video here.

As an employer and a fiduciary, it is your job to understand these costs and what is reasonable to pay your providers to help you manage the plan.

If you have any other questions, would like more information, or are ready to take action and learn how the fees are being paid in your plan, and how we may be able to restructure and lower those fees, please give us a call or send us an email. We look forward to hearing from you soon.