When making investment decisions, it's important to consider fees and expenses that may reduce the growth of your retirement savings accounts.
Your selection of investment options should take into account a number of factors that will vary in importance depending on your personal circumstances. These factors include, among others, your tolerance for risk and the length of time before you expect to need your retirement funds. You should also consider the role of fees and expenses, such as those represented by mutual fund and TIAA product expense ratios, in making your investment selections.
Fees and Expenses to Consider
The contributions that you and Stanford make to your SCRP, along with your investment earnings can increase your retirement savings over time. However, fees and expenses charged to your retirement savings account can substantially reduce that growth. For this reason, it is important to consider what expenses are charged to your account and how they are paid. Fees and expenses charged to your account may include:
- Administration fees
- Recordkeeping fees
- Investment management fees
- Rule 12b-1 fees (distribution fees and/or services fees)
- Sales charges, including front-end loads and redemption fees
- Short-term trading fees
- Surrender and transfer charges for annuity products
- Mortality and expense risk charges
The recordkeeping fee for Vanguard and Fidelity funds (Option 1, 2 and 4) will be charged as a flat annual recordkeeping fee, regardless of the number of funds you select. To pay this fee, your account will be charged each quarter. This fee is subject to review and may be adjusted. If you invest in TIAA you pay an administrative fee that is embedded in the TIAA annuity products. The fees for investment funds selected through the Fidelity self-directed brokerage account will vary by the funds(s) selected.
Overall services and expected net-of-fee returns should be considered when comparing fees and expenses for different options. Expenses charged against your account represent a lost opportunity, since money that might otherwise have gone into investments is used instead to pay for services. The laws of compound interest mean that even small differences in fees and expenses charged to your account can make a substantial difference in your retirement savings over time.
Accordingly, any fees and expenses that reduce investment return should be considered together with other factors when you choose how your account will be invested. Investment products vary considerably—cheaper is not necessarily better, nor do higher fees necessarily mean better returns.
For general information about fees and expenses, you may wish to consult the Department of Labor’s booklet, Understanding Retirement Plan Fees and Expenses, available on the Department of Labor’s website.
For more specific information about your investment options, including details about risk and return characteristics, fees and expenses, please review the fund prospectus or contact: