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Started By
Message
Options for high fee 401k
Posted on 4/16/16 at 8:51 am
Posted on 4/16/16 at 8:51 am
I own my own business, and we have a 401k plan with John Hancock. Their fees are ridiculous, with expense ratios averaging 1.8%. My partner is unwilling to change to a different broker (broker is a close friend of his). I'm polling the board for best options, wondering if I can roll current 401k into IRA with betterment/Wealthfront. I didn't know if I could continue to contribute into 401k after transferring funds into IRA.
4
Posted on 4/16/16 at 10:19 am to Flavius Belisarius
(no message)
This post was edited on 4/16/16 at 11:42 am
Posted on 4/16/16 at 9:15 pm to Flavius Belisarius
How big is the plan?
Posted on 4/16/16 at 9:36 pm to Flavius Belisarius
Sounds like your partner is a nepotistic a-hole.
Posted on 4/16/16 at 11:51 pm to Flavius Belisarius
Inform your partner of the recent Supreme Court case which will allow participants to sue fiduciaries for breach of fiduciary duty for things like -- limited 401K options and only giving them high-fee alternatives for their 401K investments.
Posted on 4/17/16 at 8:51 am to MMauler
I don't think threatening a lawsuit would be the best idea
Posted on 4/17/16 at 8:57 am to MMauler
For one that rule isn't effective until at least April of next year. And point two is a lot of plans have an asset based fee (fee based) schedule depending on the plan size as Janky was getting to earlier. The smaller the plan the higher the fee schedule, but as the plan grows in assets that fee schedule tiers down. And yes you do have expense ratios on top of that fee.
Posted on 4/17/16 at 11:05 am to LSUtoOmaha
quote:
I don't think threatening a lawsuit would be the best idea
No one is threatening a lawsuit. He's simply telling his co-owner that both of them could be sued in the future for BIG MONEY by employees/former employees if they find out that they were paying ridiculously high fees simply because one of the owners was good friends with some scumbag brokerage employee -- when they could have gotten a better, more appropriate fee arrangement FOR THEIR EMPLOYEES MONEY in the open market simply by comparing brokerage fees.
Trust me when I say, you're going to be seeing A LOT of these breach of fiduciary duty suits in the near future involving the outrageous fees brokerage firms are charging 401K plans. And it will be the employers who will be held responsible for not shopping for better alternatives.
I highly recommend that anyone participating in a 401K plan watch Frontline's The Retirement Gamble on PBS. It's a little scary and extremely illuminating.
This post was edited on 4/17/16 at 11:09 am
Posted on 4/17/16 at 1:07 pm to MMauler
quote:
I highly recommend that anyone participating in a 401K plan watch Frontline's The Retirement Gamble on PBS. It's a little scary and extremely illuminating
I agree. I only recently looked into it because for years even deciphering the expense ratio for available funds was very difficult, now they are updated regularly. We don't pay any management fees, only expense ratios. Still, I balk at 1.8% fee for a fund that underperformed the s&p the last few years. Beating the market by 2% a year regularly is difficult and increases the odds that the rate of return will be negative. I'm thinking I will transfer to an Ira with betterment (0.15% fee) if I can't find a new broker that beats our current options.
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