Four invoices, not one plan fee.

A proposal that quotes a single "plan fee" is usually compressing four relationships into one number. The compression is understandable. An owner wants to know what the pension will cost before agreeing to fund it. The compression becomes expensive when the number leaves out the actuary, or the custodian, or the year-two work, and the owner feels the later invoices as surprises. They are not surprises if the jobs are named at the start. This briefing names them. It does not price them. A one-participant cash balance plan and a defined benefit plan with a staff, a cash balance credit schedule, and a 401(k) are not the same engagement, and a published rate card would be a fiction. Quotes vary. Anyone who gives you a universal price before seeing the census is estimating a different plan from yours.

Sterling Pension Group is a third-party administrator in West Hartford. We charge for the administration we perform. We coordinate independent Enrolled Actuaries, who bill for the valuation they sign. We are not an actuarial firm, and we are not an investment adviser. The fees page is the standing version of this separation. What follows is the owner-level map of who is paid, for what, and why the categories should stay visible.

Setup is the document and the first year of decisions

Setup is the work of putting a plan in place. Someone has to confirm the entity, the compensation that the plan will be allowed to see, the eligibility, the formula, and the way the plan will be funded and trusted. The document has to be adopted by the employer. An employer identification number for a trust, a custodial account, and a resolution are ordinary pieces, not extras. So is the first illustration that is honest enough to adopt from, which means a census, not a single age and a hoped-for contribution.

For a defined benefit or cash balance plan, setup also includes the Enrolled Actuary's opening valuation work. That work may be billed with the actuary's first annual fee or quoted beside it. It should not be buried so that adoption looks cheap and the first Schedule SB looks like a new idea. The document and the valuation have to match. Adopting a formula the actuary has not seen is how the first amendment happens in the same year as the adoption.

A 401(k) feature, if you are building a combination, adds a record of elective deferrals, a payroll election, and a document that has to be coordinated with the pension rather than stacked on top of it by a different vendor who has not read it. Setup that ignores the existing 401(k) is not setup. It is a second plan that will have to be reconciled. The administration overview describes the ongoing version of that reconciliation. The first year is when the reconciliation is cheapest.

Setup does not include the contribution itself. The largest check in the year is the deposit to the trust, and it is not a fee. Owners sometimes compare a setup invoice to the tax benefit and conclude the invoice is the cost of the plan. The cost of the plan is the contribution, the staff cost if there are employees, the fees, and the funding obligation in later years. The invoice is only the professional piece. Publication 560 is useful here because it describes plan types without sales language. It will not tell you what a local firm charges. It will keep the contribution and the fee from being the same word.

Annual administration is a year, not a binder

Once the plan exists, someone administers it every year. The census is collected and checked. Eligibility is applied. Compensation is matched to the document's definition. For a cash balance plan, hypothetical accounts are updated for pay credits and interest credits. Compliance testing is run when the plan is not owner-only. The Form 5500 series is prepared. Participant notices go out when they are required. Distributions are processed when someone is owed a payment. Amendments are drafted when the formula or the law changes.

That list is the annual administration fee. It recurs. A year in which you "did not really use the plan" is still a year. The 2024 return is due July 31, 2025, extended only to October 15, 2025 if Form 5558 is filed on time. The work of that filing does not shrink because the contribution was similar to last year's. The IRS Form 5500 corner and the Department of Labor's reporting page describe the filing. They do not staff it. Someone you pay staffs it, or you do it yourself, which is a choice small employers rarely enjoy after they have seen Schedule SB.

Administration scopes differ, and this is one reason quotes vary. A plan with two participants and a simple credit is not a plan with twenty employees, a cross-tested profit-sharing formula, and a controlled group. A year with a termination, a new location, or a plan freeze is not a steady-state year. Ask what is included, what is billed as a project, and what happens if the census arrives late or wrong. A low annual fee that excludes the Form 5500, the testing, or the notices is not a low fee. It is a partial quote.

We should be able to tell you, before you engage, which of those tasks are in the annual work and which are not. If a task is out of scope, it should be named. "Miscellaneous compliance" is not a scope. The deadline calendar is a way to see the tasks as dates. If a proposal's annual fee is silent on a date that is on the calendar, ask who owns that date.

Actuarial work is a separate profession

The Enrolled Actuary values the plan, determines the minimum required contribution and the deductible maximum, certifies the adjusted funding target attainment percentage when that certification is required, and signs Schedule SB. That is a separate engagement from administration, even when one firm coordinates both, and even when the invoices arrive in the same month. The briefing on what the actuary signs is the longer explanation. The short version is that you are paying for a statutory certification, not for a second copy of the census.

Actuarial fees move with the work. A repeating valuation for an owner-only cash balance plan is a different assignment from the first year of a new formula, a change in the interest crediting rate, a spinoff, or a termination. Quotes that ignore that difference will be revised, and the revision will feel like a dispute. Ask the actuary what the annual certification includes and what would be quoted separately. Ask it before the soft quarter in which you want an amendment. Amendment calculations are how a fixed annual actuarial quote stops being fixed.

Sterling Pension Group does not sign the certification and does not mark up a secret actuarial fee into an unnamed "pension charge." The actuary's engagement should be visible to you. If you want one firm to coordinate the calendar so that you are not managing the handoff, that coordination is administration. It is not a reason to obscure whose name is on Schedule SB.

The limits the actuary is applying this year are not a matter of opinion. For 2025 the defined benefit dollar limit is an annual benefit of $280,000, compensation is capped at $350,000, and the defined contribution annual additions limit is $70,000 before catch-up. Those figures are in the IRS cost-of-living table. They do not set the fee. They set the work inside the valuation. A contribution illustration, however careful, is not the certification you are paying the actuary for. Illustrations are for the decision. Schedule SB is for the filed year.

Investments are a third check, written to someone else

The trust's assets are invested somewhere. A custodian charges for the account. An investment adviser charges for advice, usually as a percentage of assets or as a stated fee. An insurance contract has its own costs, which are often inside the product rather than on an invoice you recognize as a fee. None of these is the administration fee, and none of them is the actuarial fee. They continue for as long as there are assets, including years in which the contribution is small.

Ask for this category in writing before you adopt. Who holds the assets. Who is the trustee. Who chooses the investments. How that person is paid. Whether the crediting rate in the document is a fixed rate the portfolio is trying to earn, or a market rate tied to the assets. A fixed rate, the pattern in most micro plans, means the investment result and the account statement can diverge. That divergence is not an administrative error. It is a funding item. It belongs in the conversation with the adviser and the actuary, and it should not be discovered as a line called "fee" that is actually an earnings shortfall.

We do not select the portfolio and we do not charge an asset-based investment fee for administration. If someone describes our work as if it were investment management, the description is wrong. If an adviser describes administration as included in the asset fee, ask what is actually included. Form 5500 preparation and an actuarial certification are rarely inside a basis-point quote, and when they are, you should see them itemized anyway. Opacity helps the seller. It does not help the administrator who still has to file the return.

There is also your CPA's time, which is easy to forget because it is already a relationship. The deduction under section 404, the timing under section 404(a)(6), and the payroll that produces the compensation the plan uses are accounting work. Counsel's time appears when the question is a controlled group, a partnership agreement, or a plan document that needs more than a prototype. Those invoices are not pension fees. Leaving them out of the mental budget makes the pension fees look like the entire professional cost.

How to read a quote without a rate card

Ask each proposer to sort the quote into the four buckets: setup, annual administration, actuarial certification, and investments. Ask what recurs, what is hourly, and what is excluded. Ask what a freeze, a restatement, or an extra participant costs. Compare scopes, not the smallest number on the page. A lower administration fee that assumes you will prepare the census perfectly, on the first try, in the actuary's format, is a quote about your time as well as ours.

Do not ask the internet for a normal price and then treat a difference as a defect. The census, the plan type, the actuary's market, and the investment structure move the numbers. We would rather decline a comparison built on a price we did not quote than pretend there is a standard invoice for a professional practice. There is a standard set of jobs. There is not a standard price.

Nothing in this briefing is tax, legal, investment, or actuarial advice. A fee conversation is also not a contribution quote. The deposit to the trust is calculated by the Enrolled Actuary within the limits of the plan. It is not a percentage of our invoice, and it is not capped by the $280,000 benefit limit, which limits the benefit rather than the fee or the deposit.

What to do in the next two weeks

Take the last proposal you received and mark each line as setup, administration, actuarial, investment, or contribution. If a line could be two of those, it is not yet a clear line. Send it back for a split.

If you already have a plan, pull last year's invoices and do the same marking. Note anything you paid that you cannot classify. That item is the one to ask about before this year's valuation starts, not after the Form 5500 is in process.

If you are comparing firms, ask each of them who signs Schedule SB and who files Form 5500. The answers should be names and roles, not a brand. Then ask us for a scope in those categories. We will quote from the census you actually have. We will not send a rate card that pretends every practice is the same plan.