US Defined Contribution Plan

• Most financial advisors charge an annual fee in the “ballpark” of 25 to 50 basis points. (Note: a “basis point” is 1/100 of 1%. So, a fee of 50 basis points is 0.50% multiplied by the plan assets.)
• There are recordkeeping/administrative service fees for any plan as well an investment platform from which the plan’s investment funds are chosen. The recordkeeper/administrator may charge a “bundled” fee for all of its services or may charge separate fees for different services. Regardless of how fees are charged on an annual basis, there is likely to be an initial fee relating to the preparation of a plan document.
• Under a 403(b) or 401(k) plan, the amount credited to a participant’s account is adjusted by the investment results of the funds in which the participant’s account is invested.  
• The plan’s fees can be paid by the employer, paid by the participants, or shared by the employer and the participants.
  • If fees are paid by the participants, the fees are often allocated to the participants’ accounts in proportion to the participants’ account balances. The annual fees are typically subtracted from participants’ accounts in quarterly installments.
  • Some employers choose investment funds with higher expense ratios because those higher fees generate “revenue sharing” that can be offset against plan fees. But these higher expense ratios reduce a participant’s rate of return from a particular mutual fund investment.

• Each retirement plan has a “plan administrator” that is a fiduciary under federal law. For most plans, the plan administrator is the employer or individuals working for the employer.
  • Most 403(b) plans and 401(k) plans allow participants to choose the manner in which their account balances will be invested. The participants choose from a “menu” of investment funds selected by fiduciaries for the plan. The CSI 403(b) Retirement Savings Plan includes four types of plans in which participants have as much or as little individual say so in investments as they prefer.

Here are some of the key concepts:

• CSI is the sponsor of the CSI 403(b) Retirement Savings Plan. CSI member schools may join the CSI 403(b) Plan as participating employers. Each participating school will still have flexibility to make decisions regarding the following issues for its employees:
  • Employer contributions: Will the school make contributions on behalf of its employees? If so, will those contributions be matching contributions or contributions based upon eligible employees’ compensation? A participating employer may separately determine the type and amount of its contributions for each school year.
  • Vesting: Will the employer contributions be subject to a three-year vesting schedule, or will they always be 100% vested?
  • Borrowing from accounts: May employees borrow from their accounts?
• CSI has chosen retirement plan professionals to carry out most administrative functions relating to the Plan:
  • TIAA is the Plan’s recordkeeper. The investment funds will be chosen from TIAA’s investment platform, which includes TIAA investments and mutual funds from many other fund families. With TIAA RetirePlusPro, individuals have the opportunity to choose investments.
  • TAG Resources is the third party plan administrator that assures plan compliance. 
  • CBIZ Retirement Plan Services is the Section 3(38) investment manager. CBIZ helps choose the menu of investment funds made available under the Plan and will monitor their performance on an ongoing basis.

None of these responsibilities are imposed on participating employers. The goal is to simplify the operation of the Plan from the standpoint of a participating employer (school) and reduce legal risks and costs. The employer does have responsibility for timely contributions under the law that are explained when you join the plan. 

These service providers are also available to help you now. They can answer questions about the CSI Plan and assist you in “signing up” to be a participating employer.

• By establishing a “multiple employer plan,” CSI will be able to achieve a saving in costs. The following fees apply:
  • TIAA and TAG together will charge a fee of $190 per participant per year for recordkeeping/administration of the Plan. This fee will decrease as the number of participants increases.
  • CBIZ will charge a fee of five basis points per year for its work as a Section 3(38) investment manager. But, at the current time, CSI intends to pay CBIZ’s annual fee.
  • A plan that has more than 100 participants is required to be audited by a CPA each year. This cost is likely to be in the range of $10,000–$15,000 per year. In a multiple employer plan, this cost is “spread” over many employers and participants.
  • Refer to the initial menu of investment funds that will be made under the CSI Plan. We recommend you carefully review the information regarding the rates of return and expense ratios for these funds. As you can see, the rates of return are better, and the expense ratios are lower, than those for the peer funds.

To assist you in comparing different proposals, refer to the Plan Comparison Chart that lists many of the relevant issues regarding the cost and administration of a 403(b) or 401(k) plan. We have included the information regarding the CSI Plan. You can add the information regarding other proposals you receive so that there is a side-by-side comparison.

You may email 403bplan@csionline.org, and a member of the CSI staff will contact you within 24 hours on weekdays.