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Who Gets a Cut of Your Retirement Plan Fees?



Chad Parks is Founder, President, and CEO of Ubiquity Retirement + Savings, formerly The Online 401(k), has helped savers contribute over $1.4 billion towards their retirement since 1999. As one of the first flat-fee-for-service small business plan providers in the nation, Ubiquity delivers peace-of-mind with zero hidden-fees in the fine print. The company is headquartered in San Francisco with satellite offices from coast-to-coast. Read More...

Parks started out as a broker in the financial services industry by growing a portfolio of individual clients at San Francisco’s Piper Jaffray. Driven by a desire to better serve his clients while anticipating the phasing out of the traditional broker model, Parks left Piper Jaffray in 1997 to obtain his CFP designation and start his own fee-for-service, independent financial planning practice, Retirement & Education Group, Inc.

In his financial planning practice, Parks came across many small business owners looking for cost-effective and quality retirement plans. Finding the small business market highly neglected and underserved, Parks saw the opportunity and took it by launching The Online 401(k). Today, Ubiquity serves more than 7,000 small business customers in 50 states, providing solutions both directly and through partners, such as Zenefits, Charles Schwab & Co. and Morningstar, as well as payroll companies, financial planners and CPAs.

Parks has been quoted in many financial services as well as national publications such as The Wall Street Journal, The New York Times, Fox Business, Yahoo! Finance, USA Today, CNN Money, Bloomberg Wealth Manager, Business Week, Entrepreneur and Plan Sponsor for his considerable work performed in the space of small business retirement as well as his foray into documentaries with his independently produced Broken Eggs Film, released in 2014.

With his extensive work in Washington DC in getting legislation passed in order to stop the practice of hiding fees in the fine print, Parks has become the go-to expert on public policy as it relates to 401(k), as well as the looming retirement crisis in America, and what we can do to fix it.


September 23, 2015 at 8:00 am
Personal Finance


Are you paying anything for your retirement plan?


imgresWhen asked that question during an AARP survey, 71 percent of respondents answered no, compared to 23 percent who believed they do pay for their plan (6 percent were unsure).


The fact that seven in 10 Americans do not believe they pay anything for their plan is troubling, especially because 401(k) fees can be exorbitant and are distributed to multiple sources. The industry has done a stellar job of remaining opaque on the subject of fees, despite the Department of Labor enacting tougher fee disclosure rules in 2012.

Where do these fees go? There are a number of hands in the pot, so to speak. Here are the three entities that collect on your 401(k) fees, no matter how high or low they are.


1.  Administration

 For every 401(k) plan, an important legal component is the third party administrator (TPA). Administration refers to the responsibilities of a third party to manage the intricacies of the federal regulations that govern the actual 401(k) code of retirement planning. In short, this is a group that ensures your 401(k) is compliant.

Those responsibilities include, but are not limited to, making required amendments to the documents, administering the required year-end testing and reporting the Form 5500 (think 401(k) tax forms) to the IRS.

2.  Record keeping

The record keeper is the person who looks after the numbers for your business. They keep track of employees’ money and the gains/losses on the funds that need to be entered each day. They are also responsible for year-end reporting, calculation of vesting, numbers reported back for IRS tax forms and compliance testing, etc. The numbers are just as important as, if not more than, the legal aspects.

3.  Investments

All 401(k) plans contain asset-based fees that vary and go into three different sources. These fees can run anywhere from 1 to 2 percent of your 401(k) balance, which is like a double-edged sword; the larger your balance, the more you pay in investment fees.

First, the fees are distributed to the fund company that created the fund for you. Then, the TPA again steps in and gets even more of your money. Why’s that? Well, they’re in cahoots with the fund company, as they frequently refer business to the fund company. Lastly, fees are paid to your advisor. While this is usually someone whose job is to meet with you and educate you on your 401(k), they’re also licensed to sell these funds and get a kickback for doing all the foot work to bring the client to the table in the first place. As long as your 401(k) is running, they’re getting a percentage too.

401(k) participants should realize that while there is no free lunch, they don’t have to be paying obscene amounts for their plans. In fact, a plan can cost as little as $4 a month – with nothing hidden in the fine print.

This article first written for Employee Benefit Adviser