U.S. Department of Labor

Employee Benefits Security Administration
This publication has been developed by the U.S. Department of Labor, 

Employee Benefi ts Security Administration.

To view this and other EBSA publications, visit the agency’s Web site at:

www.dol.gov/ebsa

To order publications or to request assistance from a benefi ts advisor, 

contact EBSA electronically at:

www.askebsa.dol.gov

Or call toll free: 1-866-444-3272

This material will be made available in alternative format to persons with 

disabilities upon request:

Voice phone: (202) 693-8664

TTY: (202) 501-3911

This booklet constitutes a small entity compliance guide for purposes of the 

Small Business Regulatory Enforcement Fairness Act of 1996. 

Updated August 2013
U.S. Department of Labor

Employee Benefits Security Administration
Introduction................................................................................................................................. 

1. Why consider fees?................................................................................................................. 

2. What are 401(k) plan fees and who pays for them?............................................................

3. What fees are associated with my investment choices in a 401(k) plan?..........................

4. Where can I get information about the fees and expenses charged to my 401(k) plan 

account?..................................................................................................................................

5. What other factors might impact the fees and expenses of my 401(k) plan?....................

6. Is there a checklist I can use to review my 401(k) plan’s fees?..........................................

7. What other sources of information are available?...............................................................

Table of Contents

1

1

2

4

6

7

8

9
Introduction

1

More and more employees are investing in their futures through 401(k) plans. Employees who 

participate in 401(k) plans assume responsibility for their retirement income by contributing part of their 

salary and, in many instances, by directing their own investments.

If you are among those who direct your investments, you will need to consider the investment 

objectives, the risk and return characteristics, and the performance over time of each investment option 

offered by your plan in order to make sound investment decisions. Fees and expenses are one of the 

factors that will affect your investment returns and will impact your retirement income.

The information contained in this booklet answers some common questions about the fees and 

expenses that may be paid by your 401(k) plan. It highlights the most common fees and encourages you, 

as a 401(k) plan participant, to:

Make informed investment decisions;

Consider fees as one of several factors in your decision making;

Compare all services received with the total cost; and

Realize that cheaper is not necessarily better.

Keep in mind, however, that this booklet is a simplifi ed explanation of some common 401(k) fees. 

It is not a legal interpretation of the nation’s major retirement benefi ts protection law, the Employee 

Retirement Income Security Act (ERISA), or other laws, nor is this information intended to be investment 

advice.

1. Why consider fees? 

In a 401(k) plan, your account balance will determine the amount of retirement income you will 

receive from the plan. While contributions to your account and the earnings on your investments will 

increase your retirement income, fees and expenses paid by your plan may substantially reduce the 

growth in your account which will reduce your retirement income. The following example demonstrates 

how fees and expenses can impact your account.

Assume that you are an employee with 35 years until retirement and a current 401(k) account balance 

of $25,000. If returns on investments in your account over the next 35 years average 7 percent and fees 

and expenses reduce your average returns by 0.5 percent, your account balance will grow to $227,000 at 

retirement, even if there are no further contributions to your account. If fees and expenses are 1.5 percent, 

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however, your account balance will grow to only $163,000. The 1 percent difference in fees and expenses 

would reduce your account balance at retirement by 28 percent.

In recent years, there has been a dramatic increase in the number of investment options typically 

offered under 401(k) plans as well as the level and types of services provided to participants. These 

changes give today’s employees who direct their 401(k) investments greater opportunity than ever before 

to affect their retirement savings. As a participant you may welcome the variety of investment options and 

the additional services, but you may not be aware of their cost. As shown above, the cumulative effect of 

the fees and expenses on your retirement savings can be substantial.

You should be aware that your employer also has a specifi c obligation to consider the fees and 

expenses paid by your plan. ERISA requires employers to follow certain rules in managing 401(k) plans. 

Employers are held to a high standard of care and diligence and must discharge their duties solely in the 

interest of the plan participants and their benefi ciaries. Among other things, this means that employers 

must:

Establish a prudent process for selecting investment options and service providers;

Ensure that fees paid to service providers and other expenses of the plan are reasonable in light of 

the level and quality of services provided;

Select investment options that are prudent and adequately diversifi ed; 

Disclose plan, investment and fee information to participants to make informed decisions 

regarding their investment options under the plan; and

Monitor investment options and service providers once selected to make sure that they continue 

to be appropriate choices.

2. What are 401(k) plan fees and who pays for them?

 If you want to know how fees affect your retirement savings, you will need to know about the 

different types of fees and expenses and the different ways in which they are charged.

401(k) plan fees and expenses generally fall into three categories:

Plan administration fees. The day-to-day operation of a 401(k) plan involves expenses for basic 

administrative services – such as plan recordkeeping, accounting, legal and trustee services – that are 

necessary for administering the plan as a whole. Today, a 401(k) plan also may offer a host of additional 

services, such as telephone voice-response systems, access to a customer service representative, 

educational seminars, retirement planning software, investment advice, electronic access to plan 

information, daily valuation and online transactions.

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3

In some instances, the costs of administrative services will be covered by investment fees that are 

deducted directly from investment returns. Otherwise, if administrative costs are separately charged, 

they will be borne either by your employer or charged directly against the assets of the plan. When paid 

directly by the plan, administrative fees are either allocated among participant’s individual accounts 

in proportion to each account balance (i.e., participants with larger account balances pay more of 

the allocated expenses) or passed through as a fl at fee against each participant’s account. Either way, 

generally the more services provided, the higher the fees.

Investment fees. By far the largest component of 401(k) plan fees and expenses is associated 

with managing plan investments. Fees for investment management and other investment-related services 

generally are assessed as a percentage of assets invested. You should pay attention to these fees. You pay 

for them in the form of an indirect charge against your account because they are deducted directly from 

your investment returns. Your net total return is your return after these fees have been deducted. (See 

pages 4-6 for more information on investment-related fees.)

Individual service fees. In addition to overall administrative expenses, there may be individual 

service fees associated with optional features offered under a 401(k) plan. Individual service fees are 

charged separately to the accounts of participants who choose to take advantage of a particular plan 

feature. For example, individual service fees may be charged to a participant for taking a loan from the 

plan or for executing participant investment directions.

401(k) plan investments and services may be provided through a variety of 

arrangements:

Employers may directly provide, or separately negotiate with and hire different providers for, some 

or all of the various services and investment alternatives offered under their 401(k) plans (sometimes 

referred to as an unbundled arrangement). The expenses of each provider (i.e., investment manager, 

trustee, recordkeeper, communications fi rm) are charged separately.

In many plans, some or all of the various services and investment options may be offered by one 

provider for a fee paid to that provider (sometimes referred to as a bundled arrangement). The provider 

will then pay out of that fee any other service providers that it contracts with to provide the services.

Some plans may use an arrangement that combines a single provider for certain services, such as 

administrative services, with a number of providers for investment options.

Regardless of the arrangement used, fees need to be evaluated, keeping in mind the cost of all covered 

services.
3. What fees are associated with my investment choices in a 401(k) plan? 

Apart from fees charged for administration of the plan itself, there are three basic types of fees that 

may be charged in connection with investment options in a 401(k) plan. These fees, which can be referred 

to by different terms, include:

Sales charges (also known as loads or commissions). These are transaction costs for 

buying and selling of shares. They may be computed in different ways, depending upon the 

particular investment product.

Management fees (also known as investment advisory fees or account maintenance 

fees). These are ongoing charges for managing the assets of the investment fund. They are 

generally stated as a percentage of the amount of assets invested in the fund. Sometimes 

management fees may be used to cover administrative expenses. You should know that the level 

of management fees can vary widely, depending on the investment manager and the nature of 

the investment product. Investment products that require signifi cant management, research and 

monitoring services generally will have higher fees. (See page 7.)

Other fees. This category covers services, such as recordkeeping, furnishing statements, 

toll-free telephone numbers and investment advice, involved in the day-to-day management of 

investment products. They may be stated either as a fl at fee or as a percentage of the amount of 

assets invested in the fund.

In addition, there are some fees that are unique to specifi c types of investments. Following are brief 

descriptions of some of the more common investments offered under 401(k) plans and explanations of 

some of the different terminology and unique fees associated with them.

Some Common Investments and Related Fees

Most investments offered under 401(k) plans today pool the money of a large number of individual 

investors. Pooling money makes it possible for individual participants to diversify investments, to benefi t 

from economies of scale and to lower their transaction costs. These funds may invest in stocks, bonds, 

real estate and other investments. Larger plans, by virtue of their size, are more likely to pool investments 

on their own – for example, by using a separate account held with a fi nancial institution. Smaller plans 

generally invest in commingled pooled investment vehicles offered by fi nancial institutions. Generally, 

investment-related fees, usually charged as a percentage of assets invested, are paid by the participant.

Mutual funds. Mutual funds pool and invest the money of many people. Each investor owns shares in 

the mutual fund that represent a part of the mutual fund’s holdings. The portfolio of securities held by a 

mutual fund is managed by a professional investment adviser following a specifi c investment policy. In 

addition to investment management and administration fees, you may fi nd these fees:

Some mutual funds assess sales charges (see above for a discussion of sales charges). These 

charges may be paid when you invest in a fund (known as a front-end load) or when you sell 

4

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5

shares (known as a back-end load, deferred sales charge or redemption fee). A frontend load is deducted up front and, therefore, reduces the amount of your initial investment. A 

back-end load is determined by how long you keep your investment. There are various types of 

back-end loads, including some which decrease and eventually disappear over time. A back-end 

load is paid when the shares are sold (i.e., if you decide to sell a fund share when a back-end load 

is in effect, you will be charged the load). 

Mutual funds also may charge what are known as Rule 12b-1 fees, which are ongoing fees 

paid out of fund assets. Rule 12b-1 fees may be used to pay for commissions to brokers and other 

salespersons, to pay for advertising and other costs of promoting the fund to investors and to pay 

various service providers of a 401(k) plan pursuant to a bundled services arrangement. Some 

mutual funds may be advertised as “no-load” funds. This can mean that there is no front- or backend load. However, there may be a 12b-1 fee. 

Target date retirement funds, which are often mutual funds, hold stocks, bonds, and cash 

investments. These funds are designed to make investing for retirement more convenient by 

automatically changing your investment mix or asset allocation over time. Target date funds may 

charge different fees even with the same target date. If a target date fund invests in other mutual 

funds (often called a “fund-of-funds”), fees may be charged by both the target date fund and the 

other funds.

Collective investment funds. A collective investment fund is a trust fund managed by a bank or 

trust company that pools investments of 401(k) plans and other similar investors. Each investor has a 

proportionate interest in the trust fund assets. For example, if a collective investment fund holds $10 

million in assets and your investment in the fund is $10,000, you have a 0.1 percent interest in the fund. 

Like mutual funds, collective investment funds may have different investment objectives. There are 

investment management and administrative fees associated with a collective investment fund.

Variable annuities. Insurance companies frequently offer a range of investment options for 401(k) 

plans through a group variable annuity contract between an insurance company and an employer on 

behalf of a plan. The variable annuity contract “wraps” around investment options, often a number of 

mutual funds. Participants select from among the investment options offered, and the returns to their 

individual accounts vary with their choice of investments. Variable annuities also include one or more 

insurance elements, which are not present in other investment options. Generally, these elements include 

an annuity feature, interest and expense guarantees, and any death benefi t provided during the term of the 

contract. In addition to investment management fees and administration fees, you may fi nd these fees:

Insurance-related charges are associated with investment options that include an insurance 

component. They include items such as sales expenses, mortality risk charges and the cost of 

issuing and administering contracts.

Surrender and transfer charges are fees an insurance company may charge when an 

employer terminates a contract (in other words, withdraws the plan’s investment) before the term 

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of the contract expires or if you withdraw an amount from the contract. This fee may be imposed 

if these events occur before the expiration of a stated period, and commonly decrease and 

disappear over time. It is similar to an early withdrawal penalty on a bank certifi cate of deposit or 

to a back-end load or redemption fee charged by some mutual funds.

Stable value funds. A common investment option that generally includes fi xed income securities and 

one or more contracts issued by banks or insurance companies that provide protection of contributions 

invested (the principal) and accumulated interest, as well as a rate of return that may be fi xed, linked to 

an index, or reset periodically based on the performance of the fund’s investments. These funds may have 

investment management and other administrative fees associated with their operation.

While the investments described above are common, 401(k) plans also may offer other investments 

which are not described here (such as employer securities).

4. Where can I get information about the fees and expenses charged to my 401(k) 

plan account? 

If you have questions about the fees and expenses charged to your 401(k) plan, review the documents 

noted below or contact your plan administrator. 

The following information is available from your plan:

If you direct the investments in your account, your plan will provide information about your 

rights and responsibilities under the plan related to directing your investments. This includes 

plan and investment-related information, including information about fees and expenses, that you 

need to make informed decisions about the management of your account. The investment-related 

information is provided in a format, such as a chart, that allows for comparison among the plan’s 

investment options. The plan should provide this information before you can direct investments 

for the fi rst time and annually thereafter. You also will receive a statement with information on 

fees and expenses for administrative or individual services actually paid from your individual 

account at least quarterly. This statement does not include charges paid indirectly from the 

investment options you have chosen. 

A model chart that is similar to what you may receive is included in the back of this publication. 

It includes performance data for each investment option over 1, 5 and 10 years; returns of an 

appropriate broad-based securities market index (referred to as a benchmark) over these same 

time periods for comparison; and fee and expense information on the costs of running each 

investment option (expense ratio) and service and shareholder-type fees (such as sales charges). 

The chart also includes a glossary to help you understand the investment options offered by your 

plan. 

To help you use this information, see EBSA’s publication Maximize Your Retirement Savings – 

Tips on Using the Fee and Investment Information From Your Retirement Plan. These tips also 

will help you use the periodic fee and investment information from your plan to see if you want to 

make any changes.

6

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Your 401(k) plan’s summary plan description (SPD) will tell you what the plan provides 

and how it operates. It may tell you about the investments offered by your plan, the fees and 

expenses paid by the plan, and how those expenses are allocated among plan participants. A copy 

of the SPD is furnished to participants when they join a plan and then every 5 years if there are 

material modifi cations or every 10 years if there is no modifi cation.

The plan’s annual report (Form 5500 series) contains information regarding the plan’s 

assets, liabilities, income and expenses and shows the aggregate administrative fees and other 

expenses paid by the plan. However, it will not show expenses deducted from investment results 

or fees and expenses paid by your individual account. You may examine the annual report for free 

online at www.efast.dol.gov. In general, the summary annual report, which summarizes the 

annual report information, is distributed each year.

You also may request copies of prospectuses or similar documents from your plan as well as fi nancial 

statements provided to your plan, and share values for your plan’s investment options (with the valuation 

date). In addition, you may want to consult the business section of major daily newspapers, business and 

fi nancial publications, rating services, the business librarian at the public library, or the Internet (see the 

list of helpful Websites at the back of this booklet). These sources will provide information and help you 

compare the performance and expenses of your investment options with other investments outside of your 

401(k) plan.

If, after doing your own analysis, you have questions regarding the rates of returns or fees of your 

plan’s investment options, ask your plan administrator for an explanation.

5. What other factors might impact the fees and expenses of my 401(k) plan? 

Funds that are “actively managed” (i.e., funds with an investment adviser who continually 

researches, monitors, and actively trades the holdings of the fund to seek a higher return than 

the market) generally have higher fees. The higher fees are associated with the more active 

management provided and sales charges from the higher level of trading activity. While actively 

managed funds seek to provide higher returns than the market, neither active management nor 

higher fees necessarily guarantee higher returns.

Funds that are “passively managed” generally have lower management fees. Passively managed 

funds seek to obtain the investment results of an established market index, such as the Standard 

and Poor’s 500, by duplicating the holdings included in the index. Thus, passively managed funds 

require little research or trading activity.

If the services and investment options under your plan are offered through a bundled program, 

then some or all of the costs of plan services may not be separately charged to the plan or to your 

employer. For example, these costs possibly may be subsidized by the asset-based fees charged 

on investments. Compare the services received in light of the total fees paid.

7

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8

Plans with more total assets may be able to lower fees by using special funds or classes of 

stock in funds, which generally are sold to larger group investors. “Retail” or “brand name” 

funds, which are also marketed to individual and small group investors, tend to be listed in the 

newspaper daily and typically charge higher fees. Let your employer know your preference.

Optional features, such as participant loan programs and insurance benefi ts offered under variable 

annuity contracts, involve additional costs. Consider whether they have value to you. If not, let 

your employer know.

Retirement plans, such as 401(k) plans, are group plans. Therefore, your employer may not be 

able to accommodate each employee’s preferences for investment options or additional services.

6. Is there a checklist I can use to review my 401(k) plan’s fees? 

There is an array of investment options and services offered under today’s 401(k) plans. Answers to 

the following 10 questions will help in gathering information about the fees and expenses paid by your 

plan. If you cannot fi nd the answers, ask your plan administrator.

401(k) Fees Checklist

1 What investment options are offered under your company’s 401(k) plan?

2 Do you have all available documentation about the investment options under your plan and the fees 

charged to your plan?

3 What types of investment education are available under your plan? 

4 What arrangement is used to provide services under your plan (i.e., are any or all of the services or 

investment options provided by a single provider)?

5 Do you and other participants use most or all of the optional services offered under your 401(k) plan, 

such as a participant loan program and insurance coverage?

6 If administrative services are paid separately from investment management fees, are they paid for by 

the plan, your employer, or are they shared?

7 Are the investment options tracking an established market index or is there a higher level of 

investment management services being provided?

8 Do any of the investment options under your plan include sales charges (such as loads or 

commissions)?

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9

9 Do any of the investment options under your plan include any fees related to specifi c investments, 

such as 12b-1 fees, insurance charges, or surrender fees, and what do they cover?

10 Does your plan offer any special funds or special classes of stock (generally sold to larger group 

investors)? 

This booklet is only the beginning of your educational process. You should ask questions and educate 

yourself about investments. Monitoring your current investment selections and reviewing the investment 

options offered under your plan are part of a process that you, as an informed participant, will need to 

undertake continually.

Keep in mind that the law requires the fees charged to a 401(k) plan be “reasonable” rather than 

setting a specifi c level of fees that are permissible. Therefore, the reasonableness of fees must be 

determined in each case.

In Conclusion ... 

When you consider the fees in your 401(k) plan and their impact on your retirement income, 

remember that all services have costs. If your employer has selected a bundled program of services 

and investments, compare all services received with the total cost.

Remember, too, that higher investment management fees do not necessarily mean better performance. 

Nor is cheaper necessarily better. Compare the net returns relative to the risks among available 

investment options.

And, fi nally, don’t consider fees in a vacuum. They are only one part of the bigger picture 

including investment risks and returns and the extent and quality of services provided. Keep in mind the 

importance of diversifying your investments.

7. What other sources of information are available?

Listed below are some organizations and their Websites, phone numbers and publications that can 

help in your research.

From the Employee Benefi ts Security Administration:

Maximize Your Retirement Savings – Tips on Using the Fee and Investment 

Information From Your Retirement Plan

Target Date Retirement Funds Investor Bulletin
10

What You Should Know About Your Retirement Plan 

Savings Fitness: A Guide to Your Money and Your Financial Future

Taking the Mystery Out of Retirement Planning

Website: 

www.dol.gov/ebsa

Toll-free Publication Hotline: 

1-866-444-3272 

From the Securities and Exchange Commission:

Get the Facts on Saving and Investing

Invest Wisely - An Introduction to Mutual Funds 

Ask Questions - Questions You Should Ask About Your Investments

Website: 

www.sec.gov 

Toll-free phone information service:

1-800-SEC(732)-0330 

From the Board of Governors of the Federal Reserve System:

Website: 

www.federalreserve.gov 

From the Comptroller of the Currency:

Website: 

www.occ.gov

Toll-free Hotline: 

1-800-613-6743 

From the American Savings Education Council (ASEC):

Website:

www.choosetosave.org/asec 

Phone: 

(202) 659-0670
11

From the Certifi ed Financial Planner Board of Standards:

Website:

www.cfp.net

Toll-free Hotline: 

1-800-487-1497 

From the Financial Industry Regulatory Authority:

Website: 

www.fi nra.org 

Phone:

(301) 590-6500
13

Model Comparative Chart

ABC Corporation 401k Retirement Plan

Investment Options – January 1, 20XX 

This document includes important information to help you compare the investment options under your 

retirement plan. If you want additional information about your investment options, you can go to the 

specific Internet Web site address shown below or you can contact [insert name of plan administrator 

or designee] at [insert telephone number and address]. A free paper copy of the information available 

on the Web site[s] can be obtained by contacting [insert name of plan administrator or designee] at 

[insert telephone number]. 

Document Summary

This document has 3 parts. Part I consists of performance information for plan investment options. 

This part shows you how well the investments have performed in the past. Part II shows you the fees 

and expenses you will pay if you invest in an option. Part III contains information about the annuity 

options under your retirement plan. 

Part I. Performance Information

Table 1 focuses on the performance of investment options that do not have a fixed or stated rate of 

return. Table 1 shows how these options have performed over time and allows you to compare them 

with an appropriate benchmark for the same time periods. Past performance does not guarantee how 

the investment option will perform in the future. Your investment in these options could lose money. 

Information about an option’s principal risks is available on the Web site[s]. 

Table 1—Variable Return Investments

Name/ 

Type of Option

Average Annual Total Return

as of 12/31/XX

1yr. 5yr. 10yr. Since 

Inception

Benchmark

1yr. 5yr. 10yr. Since 

Inception

Equity Funds

A Index Fund/ S&P 500 

www. website address 

26.5% .34% -1.03% 9.25% 26.46% .42% -.95% 9.30% 

S&P 500 

B Fund/ Large Cap 

www. website address 

27.6% .99% N/A 2.26% 27.80% 1.02% N/A 2.77% 

US Prime Market 750 Index 

C Fund/ Int’l Stock 

www. website address 

36.73% 5.26% 2.29% 9.37% 40.40% 5.40% 2.40% 12.09% 

MSCI EAFE 

D Fund/ Mid Cap 

www. website address 

40.22% 2.28% 6.13% 3.29% 46.29% 2.40% -.52% 4.16% 

Russell Midcap 

Bond Funds

E Fund/ Bond Index 

www. website address 

6.45% 4.43% 6.08% 7.08% 5.93% 4.97% 6.33% 7.01% 

Barclays Cap. Aggr. Bd. 

Other

F Fund/ GICs 

www. website address 

.72% 3.36% 3.11% 5.56% 1.8% 3.1% 3.3% 5.75% 

3-month US T-Bill Index 

G Fund/ Stable Value 

www. website address 

4.36% 4.64% 5.07% 3.75% 1.8% 3.1% 3.3% 4.99% 

3-month US T-Bill Index 

Generations 2020/ 

Lifecycle Fund 

www. website address 

27.94% N/A N/A 2.45% 26.46% N/A N/A 3.09% 

S&P 500 

23.95% N/A N/A 3.74% 

Generations 2020 Composite Index* 
14

*Generations 2020 composite index is a combination of a total market index and a US aggregate bond 

index proportional to the equity/bond allocation in the Generations 2020 Fund. 

Table 2 focuses on the performance of investment options that have a fixed or stated rate of return. 

Table 2 shows the annual rate of return of each such option, the term or length of time that you will 

earn this rate of return, and other information relevant to performance. 

Table 2—Fixed Return Investments

Name/

Type of Option Return Term Other

H 200X/ GIC 

www. website 

address 

4% 2 Yr. The rate of return does not change during the stated 

term. 

I LIBOR Plus/ FixedType Investment 

Account 

www. website 

address 

LIBOR 

+2% 

Quarterly The rate of return on 12/31/xx was 2.45%. This rate is 

fixed quarterly, but will never fall below a guaranteed 

minimum rate of 2%. Current rate of return 

information is available on the option’s Web site or at 

1-800-yyy-zzzz. 

J Financial Services 

Co./ Fixed Account 

Investment 

www. website 

address 

3.75% 6 Mos. The rate of return on 12/31/xx was 3.75%. This rate of 

return is fixed for six months. Current rate of return 

information is available on the option’s Web site or at 

1-800-yyy-zzzz. 

Part II. Fee and Expense Information

Table 3 shows fee and expense information for the investment options listed in Table 1 and Table 2. 

Table 3 shows the Total Annual Operating Expenses of the options in Table 1. Total Annual Operating 

Expenses are expenses that reduce the rate of return of the investment option. Table 3 also shows 

Shareholder-type Fees. These fees are in addition to Total Annual Operating Expenses. 

Table 3—Fees and Expenses

Name / 

Type of Option

Total Annual

Operating

Expenses

As a 

%

Per 

$1000

Shareholder-Type Fees 

Equity Funds

A Index Fund/ 

S&P 500 0.18% $1.80 $20 annual service charge subtracted from investments held in this option if valued at less than $10,000. 

B Fund/ 

Large Cap 2.45% $24.50 2.25% deferred sales charge subtracted from amounts withdrawn within 12 months of purchase. 

C Fund/ International 

Stock 0.79% $7.90 5.75% sales charge subtracted from amounts invested. 

D Fund/ 

Mid Cap ETF 0.20% $2.00 4.25% sales charge subtracted from amounts withdrawn. 

Bond Funds

E Fund/ 

Bond Index 0.50% $5.00 N/A 

Other

F Fund/ 

GICs 0.46% $4.60 10% charge subtracted from amounts withdrawn within 18 months of initial investment. 

G Fund/ 

Stable Value 0.65% $6.50 Amounts withdrawn may not be transferred to a competing option for 90 days after withdrawal. 
15

Generations 2020/ 

Lifecycle Fund 1.50% $15.00 Excessive trading restricts additional purchases (other than contributions and loan repayments) for 85 days. 

Fixed Return 

Investments

H 200X / GIC N/A 12% charge subtracted from amounts withdrawn before 

maturity. 

I LIBOR Plus/ FixedType Invest Account N/A 5% contingent deferred sales charge subtracted from 

amounts withdrawn; charge reduced by 1% on 12-month 

anniversary of each investment. 

J Financial Serv Co. / 

Fixed Account 

Investment 

N/A 90 days of interest subtracted from amounts withdrawn 

before maturity. 

The cumulative effect of fees and expenses can substantially reduce the growth of your retirement 

savings. Visit the Department of Labor’s Web site for an example showing the long-term effect of fees 

and expenses at http://www.dol.gov/ebsa/publications/401k_employee.html. Fees and expenses are 

only one of many factors to consider when you decide to invest in an option. You may also want to 

think about whether an investment in a particular option, along with your other investments, will help 

you achieve your financial goals. 

Part III. Annuity Information

Table 4 focuses on the annuity options under the plan. Annuities are insurance contracts that allow 

you to receive a guaranteed stream of payments at regular intervals, usually beginning when you retire 

and lasting for your entire life. Annuities are issued by insurance companies. Guarantees of an 

insurance company are subject to its long-term financial strength and claims-paying ability. 

Table 4—Annuity Options

Name Objectives / Goals Pricing Factors Restrictions / Fees

Lifetime Income 

Option 

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To provide a guaranteed 

stream of income for 

your life, based on shares 

you acquire while you 

work. At age 65, you will 

receive monthly 

payments of $10 for each 

share you own, for your 

life. For example, if you 

own 30 shares at age 65, 

you will receive $300 per 

month over your life. 

The cost of each share 

depends on your age and 

interest rates when you 

buy it. Ordinarily the 

closer you are to 

retirement, the more it will 

cost you to buy a share. 

The cost includes a 

guaranteed death benefit 

payable to a spouse or 

beneficiary if you die 

before payments begin. 

The death benefit is the 

total amount of your 

contributions, less any 

withdrawals. 

Payment amounts are based 

on your life expectancy only 

and would be reduced if 

you choose a spousal joint 

and survivor benefit. 

You will pay a 25% 

surrender charge for any 

amount you withdraw 

before annuity payments 

begin. 

If your income payments 

are less than $50 per 

month, the option’s issuer 

may combine payments and 

pay you less frequently, or 

return to you the larger of 

your net contributions or 

the cash-out value of your 

income shares. 

Generations 

2020 Variable 

Annuity Option 

To provide a guaranteed 

stream of income for 

your life, or some other 

period of time, based on 

You have the right to elect 

fixed annuity payments in 

the form of a life annuity, a 

joint and survivor annuity, 

Maximum surrender charge 

of 8% of account balance. 

Maximum transfer fee of 
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your account balance in 

the Generations 2020 

Lifecycle Fund. 

This option is available 

through a variable 

annuity contract that 

your plan has with ABC 

Insurance Company. 

or a life annuity with a 

term certain, but the 

payment amounts will vary 

based on the benefit you 

choose. The cost of this 

right is included in the 

Total Annual Operating 

Expenses of the 

Generations 2020 Lifecycle 

Fund, listed in Table 3 

above. 

The cost also includes a 

guaranteed death benefit 

payable to a spouse or 

beneficiary if you die 

before payments begin. 

The death benefit is the 

greater of your account 

balance or contributions, 

less any withdrawals. 

$30 for each transfer over 

12 in a year. 

Annual service charge of 

$50 for account balances 

below $100,000. 

Please visit www.ABCPlanglossary.com for a glossary of investment terms relevant to the investment 

options under this plan. This glossary is intended to help you better understand your options.