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The Plan Expense Overview is updated quarterly on this website.  You will learn about all of the DAP Plan Expenses on this Plan Overview web page under the “Resources & Planning” tab.

There are two types of expenses paid by all participants:

1)Plan Administration Expenses

Plan Administration Expenses are the expenses necessary to operate your 401(k) Plan.  These include payments for the recordkeeping, custodian, trustee, annual audit, and legal services. Other operational expenses include board member and investment advisor fees, as well as the DAP office expenses. All participant’s balances are charged for the Plan Administration Expense based on the balance in the account.

Plan administration expenses are paid by all participants in a dollar amount as a monthly participant account maintenance fee.  The current annual asset based administration fee is 0.1491% and on a monthly basis 0.012425%.  Effective October 2, 2017, this fee will increase annually to 0.18% and on a monthly basis to 0.015%.  The monthly increase is 0.002575%.

Example – For a participant with a $150,000 account balance,  the monthly fee will change from $18.64 to $22.5.

We had communicated to you last August the elimination of the Revenue Sharing and Administrative Offset Program -

While improving the investment structure and fee transparency for the DAP last October, we  also eliminated all revenue sharing and administrative offsets. These programs were a popular way to offset higher management fee costs for the actively managed funds. We believe these programs are not ideal because they do not provide an equitable fee allocation to participants. The fees are not level because revenue sharing rates vary by fund and there is also a lack of full fee transparency. Most managers have stopped marketing these programs.

This means that you will see this 0.03% annual plan administrative fee increase and lower management fees.  We no longer have the revenue sharing to help pay the plan administration expenses, but at the same time we are getting a lower investment management fee for you.  Keep in mind that when the DAP selects an investment manager, the lowest priced investment vehicle available is used whether it be a separate account, CIT (collective investment trust), or a low priced mutual fund share class.

2)Investment Management Expenses

These are the operating cost, or expense ratio, a fund company charges to manage the fund, including trading of securities within the investment options and other manager expenses.  The charge will vary for each participant depending on your individual asset allocation.  Your charge is a weighted average expense ration for your fund holdings.

Investment management expenses are paid by all participants through the rate of return on investments. The current annual investment management expense ratios for all of the DAP funds are listed on this website under the “Resources & Planning” tab.  You receive a net of fee return on investment.  For example, looking at this simplistically on an annual basis, if your account was always invested in the allocation – 50% Stable Value Fund and 50% Moderate Fund for the entire year and the investment management fees did not change throughout the year, then your approximate total investment management expense ratio is 0.41% ((.50 * 0.31) + (.50 * 0.50)). If your total annual gross return was 6.41%, then your actual net annual return is 6.00%  (6.41% minus 0.41%).

 

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