Overview
Two new 401k retirement plan options are now available to Investment Advisor Representatives. Capital Group, home of American Funds, offers flexible retirement plan solutions, available for your 401k clients. These solutions include multiple share classes, including two that are structured for fee-based advisor compensation. The TD Ameritrade Retirement Plan brings together ease of plan administration, investment flexibility and support in meeting the plan sponsor’s fiduciary responsibilities – all in a turnkey approach.
TD Ameritrade Details
The TD Ameritrade Retirement Plan offers open investment architecture with institutional fund pricing and includes resources, tools and education for plan participants. ESI requires that each plan have a 3/38 ERISA Investment Manager. The TD platform will generally be a competitive solution for larger plans, (i.e. $2M+).
Platform features include:
- Open architecture of fund lineups offering the lowest-priced share classes
- Record keeping/administration and custody of the plan assets
- Advisors may set their own fee (must be within ESI maximums based on plan AUM)
- 401k plans must select an ERISA 3(38) services independent third party. This service provides additional liability protection for the plan sponsor.
American Funds Details
Offering the advantages of large-plan pricing to small- and mid-size employer-sponsored retirement plans, American Funds RecordkeeperDirect and Plan Premier are available in fee-based solutions. While American Funds 401k commission-based products have been available in the past, the expansion of additional share classes provides ESI advisors with a flexible fee-based solution.
Platform features include:
- Increased pricing transparency with R5 and R6 share classes, the lowest fund expense share classes for American Funds 401k plans
- Record keeping/administration of plan
- Fixed dollar approach to plan pricing that – depending on share class – generates a plan credit that can offset plan expenses. Over time, net plan expenses, as a percentage of assets, will decrease as assets grow.
- Advisors may set their own fee (must be within ESI maximums based on plan AUM)
- 401k plans using either the R5 or R6 share classes must select either ERISA 3(21) or ERISA 3(38) services independent third party, Wilshire Associates Inc. (Wilshire®). This service provides additional liability protection for the plan sponsor.
Opportunity
For advisors already working in or considering expanding into this market, the American Funds and TD Ameritrade names and support can help you establish yourself and grow. Both offer a strong service model and ERISA-level technical support for advisors working in the defined contribution plan arena.
Learn More
American Funds:
- Click here for an overview brochure.
- Contact American Funds at 800-421-9900.
TD Ameritrade:
- Contact TD Ameritrade at 303-294-5328.
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