Plan Administration Fiduciary Services Fee
EFA’s standard fee to accept the fiduciary responsibility to act as the plan’s designated “Administrator” is a flat dollar amount negotiated with the plan sponsor, payable monthly (or quarterly). The fiduciary services fee for EFA’s first year of operation reflects:
- the complexity and number of plans,
- the number of employees eligible to participate specified in the Form 5500 filing for the plan year ending immediately before EFA’s commencement of fiduciary services,
- EFA’s cost of adding the Plan Sponsor’s inside fiduciaries to EFA’s Blanket ERISA Fidelity Bond (eliminating the need for the inside fiduciaries to secure their own bonding, and allowing EFA to track the identities of the covered parties and the adequacy of bonding coverage in compliance with ERISA Section 412),
- EFA’s increased cost of coverage under its Errors and Omissions, Professional Liability Policy in connection with its performance of fiduciary services to the plan, and
- the results of EFA’s preliminary ERISA Compliance Review, which consists of an analysis of the plan’s (i) history of document and operational compliance, (ii) fiduciary governance issues, and (iii) and any prior fiduciary breach claims during the three most recently completed plan years.
As an illustration, in the case of a single 401(k) Plan, with no significant compliance issues, we anticipate EFA’s monthly fiduciary services fee would be in the range of $4,000 to $5,000 plus $5 per eligible employee for every eligible employee over one hundred (100), if any. This assumes EFA will work a minimum of 15 hours per month in a fiduciary capacity and includes legal fees to engage Philip J. Koehler, Esq., EFA’s CEO, as legal counsel to the Named Fiduciary. For plans other than 401(k) Plans, EFA’s fiduciary services fee will be lower, but will reflect the same factors.
EFA will re-negotiate the annual fiduciary services fee with the plan sponsor each year thereafter based on operating results from, and the number of eligible employees determined at the end of, the immediately preceding plan year.
ERISA Compliance Review Fee
Before accepting the fiduciary responsibility to act as the plan’s designated “Administrator,” EFA performs an ERISA Compliance Review. The fee for completing the ERISA Compliance Review is typically $3,000 for plans with not more than 100 eligible employees. For plans with more than 100 eligible employees, EFA charges an additional $5 per eligible employee over 100. This fee will be credited against EFA’s Plan Administration Fiduciary Services Fee, if EFA and the plan sponsor enter into a standard fiduciary services engagement agreement within ninety (90) days after the EFA completes the ERISA Compliance Review.
Non-Fiduciary Project Fees
Non-Fiduciary Project Fees are negotiable on a per project basis or in a bundled format.
Project fees are similarly tailored to reflect the complexity of the plan design and the size of the participant group.
Non-Fiduciary Fee Reasonableness Report and Certification
EFA utilizes the DALBAR “Plan Report Card” process to conduct an independent audit of the fees paid to service providers and the quality of their services.
- DALBAR charges a processing fee of 1.5 bps (0.015% of total plan assets). For example, a plan with $20 Million in assets will pay a fee of $3,000. DALBAR’s fee may be paid by the plan sponsor, as a corporate expense, or by the plan, as a fiduciary expense.
- EFA separately bills the plan sponsor for its services at an hourly rate of $250. For plans that have no more than five (5) Covered Service Providers and ten (10) investment fund options in the plan’s line-up, we anticipate spending no more than six (6) hours to: (1) assemble the data and documents, (2) digitize and upload them to the DALBAR website, (3) confer with DALBAR in the completion of the report and certification and (4) conduct a meeting with the plan sponsor to review the results of the Plan Report Card. EFA’s fee for such a 6-hour engagement is $1,500. EFA’s fee must be paid by the plan sponsor, as a corporate expense.
Legal Counsel to the Named Fiduciary
Attorney fees will be based on a standard (non-litigation) billable rate of $400/hour. It is anticipated that the plan will enter into an annual retainer agreement based upon a mutually acceptable projection of a budget for attorney fees, expenses and other costs.