Author Topic: Fees for 401k  (Read 4439 times)

Stachebound

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Fees for 401k
« on: June 12, 2013, 02:54:35 PM »
Obviously we want to keep fees as low as possible on our investments. What is a low fee on a 401k account? I have a roll over IRA with First Investors and a 401k with Wells Fargo, invested in T Rowe Price.

Can you give me a fee range?

matchewed

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Re: Fees for 401k
« Reply #1 on: June 12, 2013, 03:53:28 PM »
Each 401k will have options defined by the company it is with and your employer. Without knowing those options there is no way to answer the 401k side of things.

As for your IRA I'm seeing Class A shares of the various funds hovering between 1.2% to Class B shares of 2%. Those fees will eat your return alive based on their own annual returns. Their Growth Income fund says they'll get 8% over 10 years which is similar to historical market performance. You can get that market performance and better through Vanguard get your 8% and only pay .17%

You'd get to keep 7.8% of your yield through Vanguard or you can give First Investors your money literally.

electricworm

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Re: Fees for 401k
« Reply #2 on: June 12, 2013, 03:56:58 PM »
You can get Vanguard mutual funds for less than a tenth of a percent annual fee. Thats what I use for my ROTH. My 401k doesnt have great options, but has an inexpensive S&P 500 fund (0.06%) and a relatively inexpensive bond fund (0.3%) compared to the other funds I have offered through my employer. I would try to spend less than a half a percent. I think anything over a percent is really expensive. If its a high fee in a tax-deferred account, it'd still probably be a better idea to use it and to defer taxes. You're still probably going to come out ahead in the long run, but why pay more in fees if you don't have to?

Stachebound

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Re: Fees for 401k
« Reply #3 on: June 12, 2013, 10:42:15 PM »
Wow thank you for that. It's a roll over IRA, can I move that somewhere else? It's kind of sensitive because it's managed by a good friend of the family. Ugh. 1% difference is huge.

matchewed

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Re: Fees for 401k
« Reply #4 on: June 13, 2013, 05:17:36 AM »
Yeah you can roll it over to Vanguard. Look I get the managed by good friend but no one cares more about your money than you. And this is math it isn't family or friends.

smalllife

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Re: Fees for 401k
« Reply #5 on: June 13, 2013, 05:27:42 AM »
Can you roll over a 401k that is actively being contributed to?  Or at least switch firms?  My fees are ridiculous at work 1.5%-3% and a casual google search only brings up 401k->IRA and 401k->Roth IRA. 

matchewed

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Re: Fees for 401k
« Reply #6 on: June 13, 2013, 06:39:03 AM »
I believe it is very difficult to roll an active 401k. My advice on the roll over is for the IRA only.

Zaga

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Re: Fees for 401k
« Reply #7 on: June 13, 2013, 07:49:23 AM »
There are 2 sets of fees in a 401-K.

First there is an account fee.  They are required to disclose this to you, but it can be hard to find.  My 401-K has a 6.5 basis point account fee, which is 0.065% of the balance.  This is a pretty awesome low fee.  Then above that each fund you invest in has an expense ratio, often abbreviated ER.  This can vary widely based on what is available, from 0.1% for a good index fund to over 1.5% for very expensive managed funds, and everywhere in between.  My 401-K has a few index funds with fees below 0.20%, which I'm grateful for.

If you are in a position to roll your account over, look to Vanguard or Fidelity Spartan funds.  Either of these has good low cost options.  For almost all circumstances, you have to keep your 401-k at your employer until you separate from employment.

Stachebound

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Re: Fees for 401k
« Reply #8 on: June 13, 2013, 10:48:11 PM »
Thank you - so when I call to ask about the fees, what should I be asking for so that I know everything I am being charged?

matchewed

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Re: Fees for 401k
« Reply #9 on: June 14, 2013, 05:01:26 AM »
Just ask for a prospectus for your investments, all fees are disclosed in there.