You know that you pay fees in your retirement plan, but you may not know what you are getting for those fees.

IF YOU'RE A SAVVY SHOPPER, you want to make sure you’re getting your money’s worth. Because your retirement plan is serviced by a full disclosure provider, you may have seen plan expenses on your statement and online. Your natural next question should be: “What am I getting for these fees?” The answer? Lots of great things!

Most important, your retirement plan gives you the ability to contribute on a pre-tax basis more than 3 times as much as you could contribute to an IRA. By contributing on a PRE-TAX BASIS, you are saving potentially thousands in tax payments. For instance, if you are in a 20% tax bracket and contribute the maximum amount to your 401(k) account, you will save approximately $3,300 in taxes each year. In addition, if your employer matches your contribution, you are getting an instant return on your investment that would not be available in a different savings vehicle.

Through your employer’s retirement plan, you also have access to mutual funds and share classes that are often unavailable on a retail or individual basis. Many individual investors are invested in B and C share classes with operating expense ratios significantly higher than that which is available to institutional investors like your employer’s retirement plan. In addition, individual investors are often subject to significant transaction fees as well as front-end or back-end fees when they make purchases or transfer funds. As a result, if you were to compare the true costs of investing as an individual investor versus investing within your 401(k) plan, you may be surprised how cost effective your retirement plan is.

There are also GREAT SERVICES available within the Plan. First, your plan sponsor engages professional investment advisors to select and monitor the investment menu available to the Plan. This ensures that the investment options from which you select are pre-screened for quality and appropriateness. When an investment option is no longer performing or no longer deemed to be appropriate for retirement plan investing, the investment option is replaced with a more appropriate investment choice. This means that when you select your investment elections, you can be confident that you are picking from great options. And the difference between an okay investment menu and an excellent investment menu can be the difference between mediocre investment returns and great returns.

Second, your plan provides a variety of investment education at no additional cost. This personalized investment education helps you create an asset allocation appropriate for your age, risk tolerance, and financial situation. If you were to engage a professional investment advisor on your own, you can expect to pay a management fee equal to 1.0% of your portfolio’s value.

Finally, your plan makes it easy for you to save by deducting and investing your contributions EACH PAY PERIOD, without incurring transaction expenses or front-end loads. This enables you to “set it and forget it”. No trips to the bank or to your broker. No broken resolutions to save more next pay period. Once you have enrolled in your Plan, your employer takes it from there. Without you lifting a finger, your contributions are deducted from your pay (pre-tax!), sent to the Plan custodian, and invested in the investment options you have selected. It’s easy, fast, and reliable.

Your employer has selected a “full disclosure” plan so that you always know what you are paying. This empowers you to compare the costs of your retirement plan with your other savings alternatives. After you have considered all of your options, invest your money in the vehicle that is most likely to maximize your retirement income.

Any tax advice contained in this communication (including any attachments) is neither intended nor written to be used, and cannot be used, to avoid penalties under the Internal Revenue Code or to promote, market or recommend to anyone a transaction or matter addressed herein. BlueStar Retirement Services, Inc. This bulletin is published as a general informational source. This information is general in nature and is not intended to constitute legal advice in any particular matter. BlueStar Retirement Services, Inc. does not warrant and is not responsible for errors or omissions in the content of this report.