Retirement data

[SAJ-99]

I understand it’s my choice but literally every fund in the plan (other than fixed 3%) is over 1% expense ratio and this was the explanation she provided when I pointed out that they were all over 1%. That’s where she said the 1% goes. Maybe it does, maybe not all of it does. What do you mean don’t settle for that?

Even for me as a peasant those fees will be several hundred dollars annually which seems ridiculous and understand at some point when I’m a millionaire like everyone on this forum it’s going to be a lot of money. My current thinking is to just move it annually into my Rollover IRA with Charles Schwab and put into low expense index fund like VOO etc. Thoughts on that? I think I would still be paying those high expenses on the annual contributions but not my entire portfolio?

As with everything in these threads, data is limited. However, every company-sponsored retirement plan should have low-fee investment options in the plan. This is pretty much industry standard. The company can't decided to overlay a principal protected survivor benefit and charge everyone 1%. That is the literal definition of excess fees. IMO that would be a violation of its fiduciary duty. The ultimate answer, like everything else these days, is a lawsuit. Might need to wait until retirement to pull that lever. LOL.

If you can roll it out into a self-directed IRA, then they may clear themself of the duty. Still, pretty sketchy that everyone in the plan gets charged 1% by the administrator for that "insurance".

 

[Big Sky Guy]

As with everything in these threads, data is limited. However, every company-sponsored retirement plan should have low-fee investment options in the plan. This is pretty much industry standard. The company can't decided to overlay a principal protected survivor benefit and charge everyone 1%. That is the literal definition of excess fees. IMO that would be a violation of its fiduciary duty. The ultimate answer, like everything else these days, is a lawsuit. Might need to wait until retirement to pull that lever. LOL.

If you can roll it out into a self-directed IRA, then they may clear themself of the duty. Still, pretty sketchy that everyone in the plan gets charged 1% by the administrator for that "insurance".

I am still confused because when I login and click on the funds it shows them as i.e. 0.43%, but I have the paper sheet she gave me and it shows the fee for same fund as 1.43%. I also got out the prospectus and it too shows 0.43% for that fund.

Is there a way to see or calculate what the actual fee charged is? I presume it must show up in the account at some point in the year?

 

[SAJ-99]

I am still confused because when I login and click on the funds it shows them as i.e. 0.43%, but I have the paper sheet she gave me and it shows the fee for same fund as 1.43%. I also got out the prospectus and it too shows 0.43% for that fund.

Is there a way to see or calculate what the actual fee charged is? I presume it must show up in the account at some point in the year?

The fund factsheet will show the fees in the funds. They just get adjusted in the price, so you never see them directly. The fund admistrator fees should show up in the monthly/quarterly statements. It sounds like, just guessing here, the 1% fee is for the insurance overlay. That might not be done by investment firm running the fund. It might be done by the plan administrator with the company’s approval. For some context, I looked at my wife’s plan at Fidelity. It has been charge $6 in administration fees this year.

This is what I mean by not accepting excuses for stuff from HR or company management. You have a right to understand where your money is going. They can get someone from the plan administrator to come give employees an education session.

 

[Mallardsx2]

Not disagreeing, just clarifying, but the max for an IRA is only $7k . . . once that's maxed out then it's back into the company plan?

i.e. Company match into lowest expense ratio fund, then max out IRA to $7k into *presumably* even lower expense ratio fund, then back into company plan?

Fund your wife's IRA.

Hold Emergency cash in T-bills ect ect.

Pay off your house.

There is too many options to list.

 

[Treeshark]

Re: investment options after IRA max out, it comes down to an analysis of tax advantage vs expense of the 401k plan. It probably comes fairly close to being a wash.

One reason I prefer a brokerage account in that scenario is that you’d be a lot less restricted on what you can do with that money, especially after it’s in long enough to avoid short term cap gains tax. Unlike a 401k, there isn’t any age or timeframe restriction to when you can withdraw (401k is 55 I believe).

T-bills are a good concept for sure, but they are a pain in the ass to deal with. One and done with those for me personally.

 

[Mallardsx2]

A brokerage account (that has some age on it to avoid the capitol gains tax) is a terrific idea and it will help bridge that gap until you can start drawing from your 401K if you decide to throw in the rag early.

I will be throwing in the rag in 13 years, 6 months, 21 days, 3 hours and 40 minutes......

If I live that long.

 

[Big Sky Guy]

The fund factsheet will show the fees in the funds. They just get adjusted in the price, so you never see them directly. The fund admistrator fees should show up in the monthly/quarterly statements. It sounds like, just guessing here, the 1% fee is for the insurance overlay. That might not be done by investment firm running the fund. It might be done by the plan administrator with the company’s approval. For some context, I looked at my wife’s plan at Fidelity. It has been charge $6 in administration fees this year.

This is what I mean by not accepting excuses for stuff from HR or company management. You have a right to understand where your money is going. They can get someone from the plan administrator to come give employees an education session.

Thanks, this was the plan administrator/advisor that went over this with me. I’ll have to get some clarification.

 

[Bonasababy]

Just my opinion....

If a person doesn't have a low cost index fund that mirrors the S&P 500, they are better off only investing in the lowest expense ratio fund that their plan offers up to their full match amount. DONT leave that match on the table. So many people do that and it is SO STUPID. PERIOD. END STOP.

Then, put the rest of their money into an IRA mirroring one of the low expense ratio 500 index funds instead of dumping more money into some crappy fund with an outrageous expense ratio....

My fund is the Spartan 500 Index. Its ratio is 0.0085% ($0.085 per $1,000). I'm not paying much of their light bill with fees and all (well, almost) of my money is compounding.......

If the 500 fails, America is failing.....Its a safe bet IMO.

For months now...you can figure out the timing....foreign has beat the pants off domestic. 2 to 3 times better returns than domestic. US dollar value has dropped to where it was in Nixon's day.

 

[Bonasababy]

I understand it’s my choice but literally every fund in the plan (other than fixed 3%) is over 1% expense ratio and this was the explanation she provided when I pointed out that they were all over 1%. That’s where she said the 1% goes. Maybe it does, maybe not all of it does. What do you mean don’t settle for that?

Even for me as a peasant those fees will be several hundred dollars annually which seems ridiculous and understand at some point when I’m a millionaire like everyone on this forum it’s going to be a lot of money. My current thinking is to just move it annually into my Rollover IRA with Charles Schwab and put into low expense index fund like VOO etc. Thoughts on that? I think I would still be paying those high expenses on the annual contributions but not my entire portfolio?

There's a law firm in my state that has specialized in suits against companies like yours. They are doing well...the class action employees not as well but they are seeing improvements in their plans going forward as a result. Bottom line...if all the choices in your plan have as high expense ratios as you say they are not even trying, and failing in their mandated fiduciary duty. Wouldn't be surprised if the company itself is getting some direct benefit from who they chose.

 

[Bonasababy]

Fund your wife's IRA.

Hold Emergency cash in T-bills ect ect.

Pay off your house.

There is too many options to list.

All payoff options should take interest rates into account. For example our mortgage is at 2.85%. No brainer that investing makes more sense than paying that off, with even conservative avg market return projections running much better than that rate.

 

[Mallardsx2]

All payoff options should take interest rates into account. For example our mortgage is at 2.85%. No brainer that investing makes more sense than paying that off, with even conservative avg market return projections running much better than that rate.

Now we have a firm grasp for the obvious.

Everyone’s situation is different based on their desires and their life objectives.

I find fault in no one who wants to pay off their bills early and I also understand if somebody wants to invest their money and just pay the monthly payment as well. Both situations have merit.

 

[SAJ-99]

I find fault in no one who wants to pay off their bills early and I also understand if somebody wants to invest their money and just pay the monthly payment as well. Both situations have merit.

You sound like my wife. As I tell her, she can "feel" however she wants, but I'm not making decisions that guarantee we have less money.

Seven questions. I would be curious to know how HT'ers rank vs the rest of the population.

Financial Knowledge Quiz | FINRA.org

www.finra.org

 

[brymoore]

Seven questions. I would be curious to know how HT'ers rank vs the rest of the population.

Financial Knowledge Quiz | FINRA.org

www.finra.org

 

[SD_Prairie_Goat]

View attachment 377028

All but the bond question. But I don't invest in bonds so I don't care much about them to be honest. Yes I understand they play role in the market as a whole but not important to my current, near, or long term goals

 

[PRO MO]

suck it, nerds

 

[Treeshark]

For months now...you can figure out the timing....foreign has beat the pants off domestic. 2 to 3 times better returns than domestic.

That is a relatively recent trend though- I spent the past several years watching my foreign funds (that’s a pretty vague term, lot of different options to get “ foreign” exposure) lag behind the S&P.

You’re right though, and it has been nice in some ways to see them start to perform a little better.

 

[mtmiller]

And I am not very smart.

 

[homers]

IMHO, Bonds are dead as far as investments go. Looking at data on the popular bond funds, pretty much no return on investment the past decade. I think dividend funds are a better replacement for traditional bonds, like VYM or SCHD. a decent dividend return plus upside.

 

[Irrelevant]

Yeah I'm dumb, I went too fast and misread the bond question.

 

[Irrelevant]

But it's really hard to believe that the average is 3 something.