Well, I've reached out to my CFO. Who blamed it on change in Dept of Labor laws. But the law says that 401k companies can either assess fees using a pro rata method (which is what they've done), or pro capita method (fixed amount for each employee). Hard to believe that anyone would sign off on a pro rata?
I've arranged a 1 hour meeting with my local VP. And have prepared about 10 slides discussing the extent to which this small fee will screw employees.
The amount of money is actually staggering. And I have a new and profound appreciation for investing in low cost index funds.
My projections:
New Employee #1: Starts at age 25. 0 initial balance. Invests 5k annually, company matches 5k. averages 7% Annual. If she retires at age 55, she'll lose an additional 20k to this fee. If she retires at age 65, she'll lose an additional 110k to this fee.
New Employee #2. Same as above, except she averages 10% annually. If she retires at age 55, she'll lose an additional 90k. If she retires at age 65, she'll lose an additional 350k.
Old Employee #1: Age 35. 300k initial balance. Invests 10k annually. Company matches 6k annually. Averages 9%. If she retires at age 55 (works 20 years), she'll lose an additional 100k. If she retires at age 65 (works 30 years), she'll lose an additional ~400k.
Old employee #2: Age 45. 600k initial balance. Invests 19.5k annually. Company matches 9k annually. Averages 9%. If she retires at age 55 (works 10 years), she'll lose an additional 40k. If she retires at age 65 (works 20 years), she'll lose an additional 200k.
These are staggering amounts of money for what is being called a "small fee".