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401k meeting today. Right way to ask about high fees??
Posted on 10/26/16 at 7:13 am
Posted on 10/26/16 at 7:13 am
So we have our annual 401k meeting today and we are getting raped on fees. I understand that they will always be more expensive within a 401k as opposed to buying directly from a fidelity or vanguard. However I feel ours are exorbitant.
Vanguard total stock has I believe .07 for investors shares from vanguard. Our total stock retirement account fund has 1.25. I may be wrong but I feel this is crazy. And this is by far the cheapest of our options. Others are approaching 2.
What is the right way to ask about these fees without making the guy who negotiates our plan look like he sucks at his job?
The guy who is in charge of our plan was a former sales rep who I believe has no idea what he is doing.
Any suggestions on what would be the most tactful way to approach this subject?
I'm guessing some of you have had the same issue and I'm interested in how you handle it.
Vanguard total stock has I believe .07 for investors shares from vanguard. Our total stock retirement account fund has 1.25. I may be wrong but I feel this is crazy. And this is by far the cheapest of our options. Others are approaching 2.
What is the right way to ask about these fees without making the guy who negotiates our plan look like he sucks at his job?
The guy who is in charge of our plan was a former sales rep who I believe has no idea what he is doing.
Any suggestions on what would be the most tactful way to approach this subject?
I'm guessing some of you have had the same issue and I'm interested in how you handle it.
5
Posted on 10/26/16 at 8:42 am to ragacamps
a question for you: are you getting a match with your 401k? If yes, then the fees you are paying are likely much less than the match so you are coming out ahead anyway. If no, than stop contributing to that plan and make your own (SEP IRA, solo401k, etc) as an individual.
as far as how to approach it, just be direct and honest. tell them that the fees on your plan are too high and what the other options are. Is there a target date fund you might could choose? Those generally have lower fees.
Also, who is the 401k with?
as far as how to approach it, just be direct and honest. tell them that the fees on your plan are too high and what the other options are. Is there a target date fund you might could choose? Those generally have lower fees.
Also, who is the 401k with?
Posted on 10/26/16 at 8:55 am to white perch
No. no match. It sucks
It's with transamerica.
I thought the other options you mentioned were just for self employed folks??
And I picked the lowest fees funds. Both are my only two vanguard options.
It's with transamerica.
I thought the other options you mentioned were just for self employed folks??
And I picked the lowest fees funds. Both are my only two vanguard options.
This post was edited on 10/26/16 at 9:02 am
Posted on 10/26/16 at 9:07 am to ragacamps
Have you looked at the actual fees of the 401(k) or just judging based on the mutual fund fees?
Yes, there are other fees besides mutual fund expense ratios to consider
Different share classes pay different fees to the plan administrator or even back to the participants and are used to offset expenses of the plan.
You should read the annual fee breakdown to figure out how the TPA, the Advisor and others are paid.
I assume you have looked up the FORM 5500 for your plan already??
Yes, there are other fees besides mutual fund expense ratios to consider
Different share classes pay different fees to the plan administrator or even back to the participants and are used to offset expenses of the plan.
You should read the annual fee breakdown to figure out how the TPA, the Advisor and others are paid.
I assume you have looked up the FORM 5500 for your plan already??
Posted on 10/26/16 at 9:15 am to ragacamps
quote:
What is the right way to ask about these fees without making the guy who negotiates our plan look like he sucks at his job?
Simply ask them to explain how the plan is structured. Explain that you feel that the expenses within the fund line up are high and would like to better understand the fee structure.
401(k) Plan are becoming more transparent but can still be very complicated, especially when discussing fees...it is very annoying. You need to look at the overall plan fee structure. Good luck, hope they can provide you with some insight.
Posted on 10/26/16 at 9:16 am to ram03reg
I would address the questions to whoever picked your 401k provider also. There's a great chance that they have no idea about fees and picked the provider for a reason that doesn't matter to most, it could be it was the cheapest to your company and that's why the fees are higher.
Yes, Your only options outside of a 401k are Roth and Trad IRA unless you are self employed.
Yes, Your only options outside of a 401k are Roth and Trad IRA unless you are self employed.
Posted on 10/26/16 at 11:03 am to ragacamps
I just met with our company's 401k guy today through Lincoln financial and his rate is .25%. He said something about owing a fiduciary duty to my employer and everyone involved in the plan, which may make that rate lower than normal, but I'm not entirely sure. Just wantedto give you a reference point.
This post was edited on 10/26/16 at 1:35 pm
Posted on 10/26/16 at 11:11 am to jammintiger
Thanks for the insight. and maybe I'm wrong. The last company i worked for was one of the largest in the nation for that industry. My current one is very small. So maybe it's not as bad as I think. But it's way higher than my last, no match, and few options.
I would just like to know if the benefit guy even knows anything about the fees or where they go.
I would just like to know if the benefit guy even knows anything about the fees or where they go.
Posted on 10/26/16 at 8:54 pm to ragacamps
Take it up with your employer's plan administrator. How big is the total plan? There are new regulations that go into effect April 2017 which should benefit the plan participant. Plan sponsors and fiduciaries have to act in the best interest of the plan participant. Go figure. The big companies like Fidelity and Vanguard will now be able to act as a fiduciary and advisor for small plans less than $50 million and that may allow your company to dump the current plan advisor and lower your fees. There are a wave of 401k lawsuits that are targeting plan sponsors for bad fund selection and high fees. I've been trying to get rid of our plan advisor for 2 years and this regulation will finally allow me to do so.
Posted on 10/26/16 at 9:44 pm to ragacamps
there's a report that's created annually breaking down the fees. You probably have access to it online. investment expenses (1% average unless its an index), advisor compensation (.25-.5% usually), provider charges (.4-.5%), and third party advisor fees ($25 per participant/yr + plus cost to do tax return, etc. I'd imagine 1.3-1.5% total is average especially for plans under $3 million.
Posted on 10/26/16 at 9:45 pm to ragacamps
quote:
transamerica
Yikes.
Posted on 10/26/16 at 9:59 pm to Breadcrumbs
The summary annual report. It's has to be sent to you within so many days of filing Form 5500 which most plans file before Oct 15th.
Posted on 10/26/16 at 10:00 pm to Serraneaux
Meaning most plans file an extension for form 5500 to October 15th which means they have to send the before the end of the year.
Posted on 10/27/16 at 2:02 am to white perch
quote:
a question for you: are you getting a match with your 401k? If yes, then the fees you are paying are likely much less than the match so you are coming out ahead anyway.
Eh?
Wouldn't this only apply if he is in the first five years or so working with this employer?
After which, the balance will far exceed the "free money" provided by the match, and thus make the high fees start to gain equal footing to the additional contributions and then surpass them.
Posted on 10/27/16 at 3:54 pm to ragacamps
quote:
It's with transamerica.
Unlike the poster that said "Yikes" to Transamerica my wife's plan is with TRS and it offers institutional fees of .10% for Vanguard target retirement funds and other Vanguard index funds are .04 - .08%, and institutional class shares of actively managed funds, so Transamerica can offer good value. It's up to the company to negotiate a better plan for its employees. She does work for an employer with > 10k employees, though.
Posted on 10/27/16 at 4:15 pm to tirebiter
Size of the plan is very inportant here. 10 people with avg balance of $5k is going to have higher percentage expenses than a $2m plan with $350k in flow, etc.
I would just ask how often they get proposals from other vendors - they do have a duty to be paying attention. They don't have to pick the cheapest but they should have a reason for picking what they did pick.
I would just ask how often they get proposals from other vendors - they do have a duty to be paying attention. They don't have to pick the cheapest but they should have a reason for picking what they did pick.
Posted on 10/27/16 at 4:48 pm to ragacamps
Could be illegal...especially if your company didn't run the plan through an ERISA attorney
Posted on 10/27/16 at 4:49 pm to Tigerstark
quote:
Size of the plan is very inportant here. 10 people with avg balance of $5k is going to have higher percentage expenses than a $2m plan with $350k in flow, etc.
That's a given and why I included the employee count. Still, to pay 2.00% fund ERs plus whatever other fees are tacked on in today's world should be noncompetitive unless the employer is tiny and/or doesn't understand the true plan costs. Depending on the OP's tax bracket he may be better off with a TIRA or Roth as he gets no match and fund costs are shite. If it helps tax wise keep pushing for the adoption of better options.
Posted on 10/27/16 at 10:23 pm to tirebiter
Ask for the 408 disclosure. All fee must be disclosed. Typical plan "all in" fees will depend on plan size. On average I see:
Under 1 million 2%
1-3 million 1.6 %
3-5 million 1.25%
Over 5 million 1.00 or less.
Those are averages. What a participant actually pays depends on his fund selection. More small cap and international will cost a little more, bond funds and index funds a little less.
Under 1 million 2%
1-3 million 1.6 %
3-5 million 1.25%
Over 5 million 1.00 or less.
Those are averages. What a participant actually pays depends on his fund selection. More small cap and international will cost a little more, bond funds and index funds a little less.
This post was edited on 10/27/16 at 10:32 pm
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