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Nonprofit 403b Retirement Plan Fees Explained

Are there hidden fees lurking inside your nonprofit 403b retirement plan?

I recently looked at my husband’s retirement plan statement. He is a teacher. I wondered if many teachers are fully aware of the possible fees that may be lurking inside their retirement plans. And then I found fees, not less than 1.5% all the way up to 2% for the cost of the inside his plan.

Fund Fees can eat into the overall return that you receive inside your retirement plan. I found that 71% of Americans, according to AARP, believe that their retirement plans are free. And as we all know, nothing is for free.

How do you examine the fees inside your retirement plan? Whether you are a director of finance, an HR manager, an Organizational leader responsible for the retirement plan, a participant in the retirement plan, or both, how do you discover the fees in your retirement plan? Every year, the retirement plan advisor and the administrator are required to show the cost of the funds in the Plan Document. In fact, some providers are displaying the fees inside the retirement plan statement for their participants.

That is exactly where I found the fees for my husband’s funds inside his plan. However, many participants are not really looking at their fees. What is the average cost? What should it be?

Ideally, you should pay no more than a combined average of .50% to .70% across all the funds in your plan, which is sometimes a full percentage point or two less than some of what I am seeing out there. You can ask your retirement plan advisor or administrator for a full accounting of the fees inside this plan.

Because it does not have to be this way. There are plans and funds out there that have low cost investments, so that your employees and you can take home more of your retirement savings.

Talk to the financial experts at Fairlight Advisors to learn more about managing your nonprofit’s investments. Schedule a free consultation today! 

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Fairlight Advisors

At Fairlight, we are uniquely positioned to combine our investment experience with a strong working knowledge of the nonprofit ecosystem in order to bring targeted and effective solutions to bear on today’s nonprofit needs. We work with both teams and individuals to manage risk and optimize investments so our clients’ time is free to continue their primary social mission. We’re hands-on, personal, and we get results.

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