Fee levelization can work for retirement plans of all shapes and sizes

If you’re like me, you can find conflicting advice a bit frustrating. For instance, I recently talked to two different contractors about a project we’re considering and received two completely different opinions. Now, I know there’s often more than one way to solve a problem, but in this situation, I don’t have enough information to know which direction to take.

I’m guessing some retirement plan advisors and plan sponsors feel the same when it comes to fee levelization or fee equalization. It’s not an easy topic to understand or explain, so there’s a lot of misinformation out there. When you don’t have enough information or the wrong information, it can get a bit frustrating.

For example, I had a plan sponsor tell me he wanted to use fee levelization, but was told by his advisor that his plan was too small. That’s simply not accurate.

So, let’s talk about some of these misconceptions so you can better sort through conflicting advice and misconceptions. Beyond just being more informed, you should be in a better position to fulfill your related fiduciary responsibilities.

Misconception: Only large companies use fee levelization

Let’s tackle the plan size misconception first. With adoption of retirement plan administrative fee levelization on the rise, plan sponsors may believe implementation is concentrated among large companies. After all, many 401(k) plan trends start with larger plans and tend to work their way down market. But as we look across our current client base, we’re seeing a wide range of plan sizes implementing fee levelization (illustrated in the graphic below).


A look at our clients proves this isn’t just a trend for the largest organizations, but something that can fit almost any retirement plan size.

Need more proof? Access Intelligence, a mid-sized media company with 250 employees was trying to offer the most appropriate, cost-effective investment options for its retirement plan, while remaining compliant. By reviewing the fees for the plans investment options and levelizing plan administrative fees for all its active participants, they were able to accomplish both goals.* View their results in this case study.

Get educated … get the facts

As with any complex topic, there’s bound to be some confusion and misinformation. Take time to fully understand it and ask lots of questions.

If you’re considering fee levelization, get educated and get the facts. To better understand the options and help mitigate related fiduciary risk, check out our recent white paper. Then consider taking these steps:

  • Gather and evaluate relevant facts, including participant needs
  • Assess available fee payment methods and determine how fees will be collected
  • Document, document, document. Use a fee policy statement for help.


[1] Principal block analysis as of June 30, 2017, Principal 2017. Based on sample of 981,695 participants in plans using fee levelization.

* Depending on plan characteristics some participants can pay lower expenses with fee levelization.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Co., member of the Principal Financial Group®, Des Moines, Iowa 50392.

©2017 Principal Financial Services, Inc.

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294550-102017 | PQ11486RR