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Started By
Message
Options within a Simple IRA?
Posted on 8/6/19 at 4:22 pm
Posted on 8/6/19 at 4:22 pm
My office has a Simple IRA offered through Ameriprise. After digging a little deeper into the fees, they quoted 5.75% at each time of purchase of a fund, then the fund charges a 1% fee (I assume annually).
I contribute up to the office match. I've managed my own ROTH through Vanguard for the past 15 years. I'm not an expert, but also not a newbie. Has anyone had dealings with this company? Are there any options to get lower fees with them? Is there such a thing as breaking off from their management and going rogue through Vanguard? Or, since this is offered through my employer, am I basically tethered to the management firm of their choice?
It just seems wrong to give up a year's worth of gains just to buy a fund. TIA.
I contribute up to the office match. I've managed my own ROTH through Vanguard for the past 15 years. I'm not an expert, but also not a newbie. Has anyone had dealings with this company? Are there any options to get lower fees with them? Is there such a thing as breaking off from their management and going rogue through Vanguard? Or, since this is offered through my employer, am I basically tethered to the management firm of their choice?
It just seems wrong to give up a year's worth of gains just to buy a fund. TIA.
4
Posted on 8/6/19 at 7:47 pm to Tiger1414
My wife works for a small business that offered these when she started. Yes those fees are rip offs an no there's nothing you can do about it. Max out for company match and after two years from participation you are allowed to transfer it to your personal ira elsewhere and put in low fee funds. But all future contributions will still go into this Simple and you'll have to deal with transference on a regular basis.
Eventually someone got through to the owner and he shitcanned the Simple and went to a real 401k.
Eventually someone got through to the owner and he shitcanned the Simple and went to a real 401k.
This post was edited on 8/6/19 at 7:50 pm
Posted on 8/6/19 at 8:09 pm to Tiger1414
First off, you’re getting 100% return every time you put in your 3% so maybe you could look at it that way to be a little more gracious.
Second, depending on your standing within the company, you could ask to use a different custodian. You could then direct the funds wherever you want them to go. A simple ira is technically your account so they can’t tell you where to have it. However, this may be a little bit of a millennial move (read: bitch move) if you’re new and they’re literally giving you free money. If you’re new, I wouldn’t want to make this impression, especially if they use a payroll company that charges them per check or the person processing the checks has too much on their plate already and will bad mouth you around the office.
Last, you could consult with the Ameriprise advisor and see if they can offer you C-shares (which are more expensive annually but no upfront charge) or regular brokerage (but they are “full service” and this is likely cost prohibitive). If you have other assets the advisor could manage you may be able to get a better program as a whole with them independently of your employer. If you’re starting at zero and plan on adding $100 a pay period you’re probably out of luck as the advisor is going to make like $100 on your account each year making you lower than chopped liver in terms of importance of keeping you happy.
I hope this helps!
Second, depending on your standing within the company, you could ask to use a different custodian. You could then direct the funds wherever you want them to go. A simple ira is technically your account so they can’t tell you where to have it. However, this may be a little bit of a millennial move (read: bitch move) if you’re new and they’re literally giving you free money. If you’re new, I wouldn’t want to make this impression, especially if they use a payroll company that charges them per check or the person processing the checks has too much on their plate already and will bad mouth you around the office.
Last, you could consult with the Ameriprise advisor and see if they can offer you C-shares (which are more expensive annually but no upfront charge) or regular brokerage (but they are “full service” and this is likely cost prohibitive). If you have other assets the advisor could manage you may be able to get a better program as a whole with them independently of your employer. If you’re starting at zero and plan on adding $100 a pay period you’re probably out of luck as the advisor is going to make like $100 on your account each year making you lower than chopped liver in terms of importance of keeping you happy.
I hope this helps!
Posted on 8/6/19 at 8:12 pm to Tiger1414
5.75% + 1%....are you sure?
Posted on 8/7/19 at 6:38 am to UpstairsComputer
There’s 2 different types of Simple IRA’s as far as IRS coding goes.
One has to stay with the financial institution once the plan has started for the year. The plan can change this coding or financial institution only at the beginning of the new year.
The second type can allow employees to hold their simple Ira at any custodian that they should so choose and change it at any point during the plan year.
One has to stay with the financial institution once the plan has started for the year. The plan can change this coding or financial institution only at the beginning of the new year.
The second type can allow employees to hold their simple Ira at any custodian that they should so choose and change it at any point during the plan year.
Posted on 8/7/19 at 8:58 am to UpstairsComputer
Thanks much for the explanations. Looks like I will let it ride for now since it just started. I know I am below chopped liver to those guys. I'll ask if there are any other lower fee options.
Posted on 8/7/19 at 9:01 am to Shepherd88
Shepard88- This is interesting. I will look further into it later this year. I could probably ask payroll to see if this is a big deal to switch. Certainly don't want to rock the boat or seem ungrateful.
Posted on 8/7/19 at 9:33 am to Tiger1414
Look into the difference between a 5304 & a 5305 plan.
Posted on 8/7/19 at 10:16 am to Tiger1414
Sounds like you are in A-shares. the load is going to generally start at 5.75% and then decrease as the value gets higher and you hit what is called breakpoints. These are a discount on the commission.
the 1% is going to be the expense ratio and will vary fund to fund. The expense ratio will be built in to the mutual fund shareprice. Generally index funds have very low expense ratios, because the fund manager is just buying the index and not doing research managing a fund that has specific holdings and goals other than buying an index. Requires complex analysis
Simple plans are kind of yours but the company will likely deal only with who they want to deal with because they can and are required in some instances to contribute. You should be able to decide the investments.
A-shares don't have a backload. IF you decide to do no-load funds they are likely going to charge you 40 bucks a purchase. If you are only buying 200 a month that is more costly each purchase than A-shares.
Advisors gotta make money too.
the 1% is going to be the expense ratio and will vary fund to fund. The expense ratio will be built in to the mutual fund shareprice. Generally index funds have very low expense ratios, because the fund manager is just buying the index and not doing research managing a fund that has specific holdings and goals other than buying an index. Requires complex analysis
Simple plans are kind of yours but the company will likely deal only with who they want to deal with because they can and are required in some instances to contribute. You should be able to decide the investments.
A-shares don't have a backload. IF you decide to do no-load funds they are likely going to charge you 40 bucks a purchase. If you are only buying 200 a month that is more costly each purchase than A-shares.
Advisors gotta make money too.
This post was edited on 8/7/19 at 10:18 am
Posted on 8/7/19 at 10:20 am to yatesdog38
1% ER on an A share is hella expensive.
Posted on 8/7/19 at 10:24 am to Janky
I agree. Prolly an international fund or something like a small cap or microcap. Some of the target date funds have high expense ratios. I'm not a huge fan of them.
Posted on 8/7/19 at 11:20 am to Janky
Not when you consider there's likely a .25 bps 12b-1 fee on it. That also goes to the advisor after year 1.
eta. it is still expensive, but 25% is explaned bby additional fees going to the advisor and .75% management fee on an active fund isn't terrible.
Either way, it sucks, but free money is better than no free money.
eta. it is still expensive, but 25% is explaned bby additional fees going to the advisor and .75% management fee on an active fund isn't terrible.
Either way, it sucks, but free money is better than no free money.
This post was edited on 8/7/19 at 11:23 am
Posted on 8/7/19 at 12:02 pm to UpstairsComputer
quote:
Not when you consider there's likely a .25 bps 12b-1 fee on it. That also goes to the advisor after year 1.
Like mentioned above small caps and maybe some international could be that much, but it is still expensive. Hell, the quintessential A share International AEPGX is on 83bps.
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