A New Retirement Plan Share Class | American Funds

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News

AUGUST 3, 2015

Introducing a New Retirement Plan Share Class and Lower Upfront Plan Costs

We’ve made improvements to our PlanPremier® retirement plan solution’s pricing and compensation that will benefit you, your retirement plan clients and third-party administrators. Along with our industry-leading support1and open investment architecture, these improvements give you more reasons to make American Funds your trusted retirement plan provider.

  • Class R-2E shares: To provide you with more compensation flexibility, we’ve created a new share class. Class R-2E shares feature annual advisor compensation of 0.50% of plan assets (paid quarterly), which falls between that of Class R-2 shares (0.65%) and R-3 shares (0.35%).
  • Lower fees: We’ve lowered the upfront cost of PlanPremier for plan sponsors by eliminating plan setup fees. Previously, sponsors would pay a one-time fee of $1,000 for plan conversions or $500 for startup plans. A document fee of $750 for takeover plans and $500 for startup plans applies for PlanPremier-Bundled if a sponsor uses the American Funds prototype plan document.
  • TPA compensation: We’ve added TPA compensation to our pricing structure for all share classes in PlanPremier-TPA except Class R-5 and R-6 shares. In general, TPAs will receive 0.05% for startup and takeover plans with proposals created on or after August 1, 2015,2 and with Class R-2, R-2E, R-3 and R-4 shares.

PlanPremier Share Class Summary

R-2
R-2E
R-3
R-4
R-5
R-6

Average Expense Ratio3

1.46%

1.16%

1.07%

0.75%

0.46%

0.37%

Advisor Compensation

0.65%

0.50%

0.35%

0.20%

Fee-based

Fee-based

Plan Credit (PlanPremier-Bundled)4

0.45%

0.30%

0.30%

0.15%

0.05%

Plan Credit (PlanPremier-TPA) Proposal Created Before 8/1/152,4

0.45%

N/A

0.30%

0.15%

0.05%

Plan Credit (PlanPremier-TPA) Proposal Created 8/1/15 or later2,4

0.40%

0.25%

0.25%

0.10%

0.05%

TPA Compensation (PlanPremier-TPA) Proposal Created Before 8/1/152

N/A

TPA Compensation (PlanPremier-TPA) Proposal Created 8/1/15 or later2

0.05%

0.05%

0.05%

0.05%

Compensation and plan credits are annual percentages of plan assets and are included in the expense ratio.

For more information, please call us at (800) 421-9900.



Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. For an investment offered through a group annuity, some of this information may differ and can be obtained from a financial professional. 

This material is intended for use by financial professionals or in conjunction with the advice of a financial professional.

Although American Funds U.S. Government Money Market Fund has 12b-1 plans for some share classes, the fund is currently suspending certain 12b-1 payments in this low interest rate environment. Should payments commence, the fund’s investment results will be lower and expenses will be higher.

1

Cogent Retirement Plan Advisor Trends, ™ 2014. In a survey of 437 plan advisors, American Funds ranked among the top providers for being easy to do business with; being committed to a fee transparency and disclosure; and offering best value for the money, including best-in-class advisor service and support.

2

TPA compensation will be paid for plans with plan proposals generated on or after August 1, 2015, unless otherwise agreed upon. Plan proposals generated before August 1, 2015, do not include TPA compensation. Compensation is based on the average daily net balance of the plan’s investment options other than assets in American Funds U.S. Government Money Market Fund, self-directed brokerage accounts, and any other investment option not reported on the service provider’s recordkeeping system.

3

Average expense ratios are provided only as examples. The actual average expense ratio depends on the investments selected for the plan and participant allocations. Expense ratios reflect applicable fee waivers and expense reimbursements, without which expenses would be higher. The average expense ratio shown for each share class is for all funded investments and is weighted, based on average daily net assets in the program as of 12/31/2016. Accordingly, more weight is given to funds with more assets. Actual expense ratios, as reported in each fund’s prospectus at the time of publication, range from 0.25% to 2.66% for R-2; 0.53% to 2.08% for R-2E; 0.20% to 2.23% for R-3; 0.05% to 2.00% for R-4; 0.05% to 2.15% for R-5E; 0.05% to 1.99% for R-5; and 0.05% to 1.93% for R-6. 

4

Plan credits may vary by investment and plan, and are applied quarterly based on plan assets except those in self-directed brokerage accounts and any other investment option not reported on the service provider’s recordkeeping system.