Changes in how your fees are collected

You may immediately notice what appears to be a new fee. It is in fact a new, more transparent way to show the administrative fees you have always been paying. You’ve always had fees and for most participants they were higher in the past. Previously, the fees were collected from the funds expense ratio expressed as a percentage.

For background, every fund has an expense ratio that is deducted from the gross return from each investment before you see your return. After deducting the expense ratio, the performance is reported net of fees, that is after all fees, charges and expenses have been applied. For example, Fund A has an expense of 1% and the fund increased by 10%. Your statement would show a net gain of 9%, but you wouldn’t see a line item on your statement of the 1% expressed in dollars. It was automatically deducted before the return was applied to your account, so you never saw dollars leaving your account to pay for the fees.

Revenue Sharing is a fraction of the expense ratio that is deducted from the fund and returned to the record keeper to cover plan expenses. This allows the record keeper to pay for administrative costs to operate the plan such as record keeping, advisory, audit and/or legal services.

The previous method of collecting fees may have led participants to believe they were not paying fees when in fact they were.

Going forward there will be transparency of the plan administrative costs and this will be shown as an explicit fee. The fees will be deducted monthly and expressed as a dollar amount on your statement and on the Plan website. This will allow you to have a better idea of the value of Plan participation.

An example might be best of a fund in your line up. Let’s break down the expenses under the old approach and the new approach.

Expense Ratio Revenue Share Admin Explicit Total
Old Approach:
JPMorgan SmartRetirement 2040 Fund
.49% + .55% + .00% = 1.04%
New Approach:
JPMorgan SmartRetirement Blend 2040 Fund
.29% + .00% + .09% = .38%

We encourage you to learn more about the Plan and how participation can help you work toward retirement readiness. Establish online access, log in and explore! If you have questions, please contact Brenda DeVecchio at 209-337-4574 or the Retirement Resource Group at 888-401-5272.

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