Recently, Vanguard evolved our approach to how our funds apply attribution credits toward recordkeeping fees. Plan sponsor fee disclosure regulations require recordkeepers to provide plan sponsors with a reasonable estimate of the fees paid for recordkeeping. Vanguard “attributes” a portion of a Vanguard fund’s expense ratio to recordkeeping.Per a prior communication, effective January 1, 2017, Vanguard moved to a fund-by-fund methodology whereby the difference in expense ratios between the Investor share class and the next lowest share class (that is available without an investment minimum to recordkeeping clients) of a fund is now the crediting rate of that fund. For example, the expense ratio of the 500 Index Investor share class (0.16%) minus the expense ratio of the 500 Index Admiral share class (0.05%) results in a recordkeeping credit of 0.11%. If there is no lower share class without a minimum, the attribution rate will be 0.00%. The methodology may impact your quarterly bill, which will depend on the share classes of your Vanguard investments and the choices your employees have made within the plan.
By moving away from crediting our funds at a share-class level using an average, there will be greater transparency between investment management and recordkeeping fees. If you have any questions, please contact Vanguard at 888-684-401K.
For more information about Vanguard funds, visit institutional.vanguard.com or call 888-684 401K to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
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