Author Topic: Feeling sorry for folks with shitty 401k/403b plans...  (Read 7120 times)

Holyoak

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Feeling sorry for folks with shitty 401k/403b plans...
« on: December 15, 2014, 10:10:23 AM »
Looking over the costs of Mutual of America options for a 403b are sickening!  I can't believe they can rape folks this hard!  I'm trying to help a friend gather up the courage, to tell the head of the non profit she works for to try and find a far better place to help the workers...  1.39% for simple basic index funds!!!  Have a look at this chart, and try not to puke!

Jeez, and I used to think "wealth managers" were sharks!!!  For SHAME MOA...  High fees AND so many funds that don't even match the benchmark!



Shade00

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #1 on: December 15, 2014, 10:19:07 AM »
I'd kill for a 1.39 in my wife's 403(b). Cheapest is over 2%. I don't think she'll stay at this job much longer so she's not raising a fuss. But man, it's bad. Luckily mine has a single S&P fund at .1 - then there are some at .5-.7 and the rest over 1. I complain every year but it seems my definition of low cost does not equal their definition of low cost.

smalllife

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #2 on: December 15, 2014, 10:43:55 AM »
That's about what the rates were at my company.  I made an argument and it's gotten a bit better but nowhere near where it should be.  Just one more reason why retirement plans should not be tied to employment!

slugline

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #3 on: December 15, 2014, 10:49:49 AM »
Ouch! Are the employees at least getting employer match to help soothe the burn?

r3dt4rget

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #4 on: December 15, 2014, 12:45:59 PM »
I love my 403b from Transamerica Retirement Solutions! I cannot imagine paying those fees. I guess if your employer offered a match it would still be worth it, but I would contribute only enough to get max match and move the rest to IRA, HSA, etc.


thd7t

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #5 on: December 15, 2014, 12:53:19 PM »
There was a story on NPR this morning about a lawsuit against Lockheed, because their plans are so bad.  It turns out that the company supplying the 401k has a fiduciary obligation to its employees.
http://www.npr.org/2014/12/15/370794942/lockheed-martin-case-puts-401-k-plans-on-trial

irishbear99

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #6 on: December 15, 2014, 12:56:35 PM »
One more reminder of how grateful I am to have access to the TSP. I can't imagine paying so much in fees! It's absurd, and I really feel for those who don't have access to a low-cost retirement plan.

Frugal_Red

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #7 on: December 16, 2014, 03:12:13 PM »
I love my 403b from Transamerica Retirement Solutions!

I completely agree! I have a 403B through Transamerica with all in the Vanguard Institutional Index I.  It has an expense ration of 0.04%!! :-D

ketchup

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #8 on: December 16, 2014, 03:14:58 PM »
Mine is with American Funds, and it also sucks pretty hard.  But I do get a match, so I grin and take it.

G-dog

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #9 on: December 16, 2014, 05:15:02 PM »
Wow, that is appalling. We used to have Vanguard (yay!). Then the company that bought us moved us over to .merrill (to manage the funds, but it looks like the company is actually holding the funds and may be taking fees. Not clear to me if the Merrill info includes ALL fees in the ER, or if some super secret fees are also taken). We do get a good match though, and I did find funds with lower ERs.

Sid Hoffman

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #10 on: December 16, 2014, 08:53:25 PM »
That's about what the rates were at my company.  I made an argument and it's gotten a bit better but nowhere near where it should be.  Just one more reason why retirement plans should not be tied to employment!

Yeah no kidding.  Companies will already direct deposit your paycheck in any bank you want.  They could just as easily direct deposit your 401k contributions to any plan and still have the ability to do matching or whatever they want just by tacking that on to the normal contribution or as special contributions.  Then if you want to do Vanguard funds for your retirement, your company would deposit $X in your Vanguard account to be invested as you see fit, for example, their 0.05% expense ratio S&P 500 index fund.  That would probably be one of the easiest laws to change.

Calvawt

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #11 on: December 16, 2014, 09:33:27 PM »
we have a lot of Vanguard choices in our non-profit's 403b plan.  The problem is smaller employers don't have the leverage to get the plans with the low fee mutual funds. In addition, they can't always cover all of the plan fees for the employees.  Unfortunately, we still have to pay something like .5% in mgmt fees.

acorn

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #12 on: December 16, 2014, 09:52:19 PM »
curious: how do employers decide which funds to offer?

Pennsylvanian

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #13 on: December 16, 2014, 10:49:42 PM »
curious: how do employers decide which funds to offer?
In the small company for which I both work and handle contributions and informational dissemination for the 401k, the funds are chosen from recommendations from the personal financial planner of the owner and his fiancÚ, who also "works" for the company. This financial planner manages the personal accounts of both individuals and the business 401k. The fees are split between participating employees in the plan based on percentage of total assets in the plan (including the $30 annual fee "per employee"!) and deducted quarterly, and in-service withdraws are not permitted in the plan document.

I belong to professional organizations in my industry and have found, over nearly two decades of speaking with financial management professionals in similar small businesses, that this is a standard arrangement through which plan options are selected for employees.*

*Standard disclaimer that the plural of anecdote is not data. All statements based on personal experience, professional experience and personal inquiry.

smalllife

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #14 on: December 17, 2014, 04:49:31 AM »
curious: how do employers decide which funds to offer?

The person who offers our funds (for which American Funds is the best he can offer . . .. no joke) also brings us business so the big boss puts that relationship over the retirement needs of his employees.  Our HR person is there because she's not qualified to work anywhere else in the company and it takes a lot for them to fire somebody: it's a recipe for a benefit disaster.

Mr. Frugalwoods

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #15 on: December 17, 2014, 05:52:18 AM »
I'd support a law that required 401k and 403b plans to offer at least ONE low cost (under 0.5%) total market index fund. 

If companies want to fill the rest of their plans with terrible high fee funds... go right ahead.  But at least offer your employees the option of doing the right thing.

Mississippi Mudstache

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Re: Feeling sorry for folks with shitty 401k/403b plans...
« Reply #16 on: December 17, 2014, 11:21:07 AM »
I just changed jobs, moving from a company with an awesome 401k (through Vanguard) and a crappy match (3%), to a company with a crappy 401k (through MassMutual) and a decent match (6.6%). I now have two ok-but-not-great index funds in my plan - S&P 500 and midcap - both with expense ratios just above 0.2%. The next best fund has a 0.8% expense ratio, and everything else is north of 1.25%. I was a bit miffed when I saw the plan's offerings, but it's not nearly as bad as what the OP posted. That is f-ing robbery.

For me, it's easy enough to put all of my 401k contributions in the SP500 and midcap funds, then balance the remainder of my portfolio with my IRA contributions, so I'm not too upset. I've already gotten a couple of my co-workers to re-evaluate their portfolios. They were completely unaware of the absurd expense ratios, and our plan makes it nearly impossible to track down.