In the last few months BrightScope has worked closely with numerous plan sponsors to update their information in our database in order to ensure their plans are accurately portrayed on BrightScope.com. We learn from each of these interactions and felt it was appropriate to highlight a plan sponsor success story.
Recently we have been working closely with the National Rural Electric Cooperative Association (NRECA) to update their data. Due to this interaction, BrightScope was able to make changes to NRECA’s total plan cost calculation that had a significant impact on NRECA’s total plan cost component rating. The issue we uncovered is that some plan sponsors, including NRECA, list all of the explicit investment management expenses for their plan on the Schedule C of Form 5500. These expenses are then added up and listed on the Schedule H under “Total Administrative Expenses.” While it is a bit perplexing that the form requires these investment expenses to be labeled “Administrative Expenses” on the form, the real issue is that less than 10% of large plans break out their investment management expenses in this level of detail and in many cases plan sponsors will list some but not all investment management expenses on the Schedule C.Â The lack of uniformity in how the Form 5500 is filled out creates an added level of complexity in our algorithms.Â BrightScope has re-tooled its algorithms to recognize when the fees on the Form 5500 truly represent the companies all-in explicit investment costs versus when we have to calculate the explicit investment fees independently from the investment menu. The result of our interaction with NRECA is a win-win:Â NRECA’s total plan cost rating is updated and BrightScope has a better understanding of one particular area of fee complexity.
NRECA’s updated Total Plan Cost component rating:
At BrightScope we are absolutely committed to ensuring 401k plans are represented fairly and accurately on our website and we encourage plan sponsors to work with us to keep the information up to date.Â BrightScope makes it easy to automatically track updates on company ratings through the “Track This Plan” feature:
We applaud NRECA for reaching out to us and encourage other plan sponsors to do the same. The best way to contact us directly is to use the Contact Us page. If you would like more information about how this particular fee issue might impact your plan please do not hesitate to contact me directly at ryan at brightscope dot com.