In some company retirement plans (401(k), 403(b), 457 plans and similar), participants have the ability to select outside professional management as an investment option in the plan.
In such a plan participants can hire Registered Investment Advisors to manage their retirement plan, and allow participants to pay advisory fees directly from their Retirement Accounts. Since the fees are paid to an SEC Registered Investment Advisor, the deduction of fees is NOT a taxable event to you, the Plan Participant.
The advantages to the participants are significant. Most working professionals have neither the time nor inclination to properly manage one of their biggest assets. The trend in Employer Sponsored Plans has been to offer “target-date funds” or “life-cycle funds”. The concept is to set up a mutual fund that has a target retirement date. As the fund moves closer to the theoretical retirement date, the mix of assets becomes more conservative. Some investors still choose to self-direct their investments.