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re: Why are 401k platforms so far behind other retirement plans?

Posted on 7/29/16 at 7:53 am to
Posted by LSURussian
Member since Feb 2005
127092 posts
Posted on 7/29/16 at 7:53 am to
quote:

But why else are the fees so high and offerings so limited?
The fees within funds offered by an employer are the same if you buy those funds in your 401(k) or in your own IRA.

As far as limited investment options, most plans that I've seen offer a diverse selection of options with the full range of investment objectives.

The administrative fees an employer must pay to the plan provider are somewhat based on how many investment options are offered. The higher the number of investment options, the higher the administrative fees.

quote:

Why would they not offer low fee options?
Every plan I've seen have at least one "low fee option" such as index funds.

If an employer is only offering high fee funds or is not offering a diverse investment selection, then a valid complaint can be made to the Dept of Labor who oversees ERISA compliance issues. This DOL site lists the responsibilities of a plan administrator

ERISA holds the management of a company personally liable if they do not follow the basic standards of conduct and may have to personally restore any losses plan participants experience due to improper use of the plan's assets. That's a very strong incentive for the people in charge of the plan to operate it properly.
Posted by LSUtoOmaha
Nashville
Member since Apr 2004
26588 posts
Posted on 7/29/16 at 9:06 am to
The S&P fund in my 401k has a fee of...0.01%

1 hundredth of 1 percent. That is better than I could find on broker sites. Then we have administrative fees of 9 dollars a quarter. Not bad at all in my opinion.
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