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Retirement Specialist

Understanding Retirement
Plan Fees & Expenses

Fees and expenses in your plan can impact your retirement savings. Plan fees generally fall into three categories:

  • Plan administration expenses
  • Individual expenses
  • Investment-related costs

What types of expenses might affect my plan?

Plan administration expenses cover the overall administrative costs of the plan. These costs include operational expenses such as recordkeeping, trustee services, and often legal and accounting costs.

Individual expenses are for services that are provided to you individually, such as taking a plan loan or distribution. If you do not use a particular service, the fees would not apply.

Investment-related costs are the fund operating expenses such as expense ratios or redemption fees.

Decoding Your 401k Fees

What is an expense ratio?

The fund’s expense ratio is the annual amount that a participant pays to cover the fund’s operating expenses and management fees. This expense is displayed as a percentage of assets. Performance information provided for your investments are net of the expense ratio. In other words, the operating and management expenses have already been deducted from each plan investment before returns are displayed.

What is a redemption fee?

Redemption fees occur when the mutual fund is purchased and sold during a short time-frame, typically 30 to 90 days. Mutual fund companies may charge a redemption fee to offset the cost of frequent trading. BB&T will provide you with warnings on PlanTrac if you decide to make a change and are at risk of being charged a redemption fee.

Are low fees the most important thing to look at when choosing investments?

No, not always. A fund with lower expenses may not necessarily be good for your overall retirement plan portfolio. When you choose your investment options, you may want to consider if the fund is suitable for your level of risk and if the investment’s performance returns and expenses are appropriate. Benchmarks of average fund expenses are provided to you annually to help you determine if your fund expenses are reasonable.

Where can I find fee information for my account?

You will receive detailed information about your plan’s investments and fees when you become eligible to participate in the plan and annually thereafter. You will also see a cost breakdown of the expenses that have been deducted from your plan account on your quarterly statement. For your plan’s up-to-date expense and performance fund information, log on to PlanTrac or call 800-228-8076.

Understanding Your Plan Fees & Expenses
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