Fee Levelization is the process of leveling the playing field for all retirement plan participants so that everyone pays their fair share of the costs associated with operating the plan.

Most people are familiar with the Total Expense Ratio which tells you what the total annual internal cost is for a specific investment in the plan. What is less understood is called Revenue Sharing.

Revenue Sharing is referring to the portion of the Total Expense Ratio that is being paid to the Record-Keeper and other service providers such as the Financial Advisor. For those that don’t know the Record-Keeper is the financial institution responsible for keeping track of the participant accounts and holds the plan assets.

Depending on the type of investment funds being offered in the plan the Revenue Sharing for each fund can be different. This can lead to participants paying more or less than their fair share of the cost to operate the plan.

Fee Levelization means using a set of investments in the plan that pay ZERO revenue sharing. This makes things clean and and easy to understand for plan sponsors and participants.

The Record-Keeper and other service providers are then forced to provide a “Required Revenue” figure which can be billed evenly to each participant in the plan.

If there is a specific topic you would like me to cover please reach out at jkolinsky@kolinskywealth.com. I want this to be a community and would love to hear from you.

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