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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Rubyvroom on December 14, 2016, 12:25:09 PM

Title: 401K Recordkeeping Fee
Post by: Rubyvroom on December 14, 2016, 12:25:09 PM
Does anyone have any idea if a 0.30% recordkeeping fee for a 401K fund with between $35M and $36M of assets is reasonable? That's what my work's 401K manager is charging plan participants (across every available fund), on top of the regular fund expenses.

I didn't realize the fee was 0.30%. I hate to say it but I've been complacent, in that I see fees coming out of my account but have never done the math to confirm that my 0.05% ER index fund is actually posting 0.35% fees. It makes sense of course that these managers charge some amount of a fee for overhead, but I'm wondering if anyone has any idea if 0.30% is reasonable.

I just went out to the managers website to try to find anything that disclosed the 0.30% recordkeeping fee and I can't find anything. If it's on their website, it's buried. I thought they had a requirement to disclose this information, but perhaps their requirement is to disclose it to my employer and not the participants. I may contact them directly and ask them to provide me their fee structure. Assuming they give it to me, I may pass that along to my employer and suggest that they be more transparent in communicating these fees to employees.

From a few Google searches, it seems that 0.30% may be below average (the average in 2015 was 0.46%, though it doesn't state any information about the average amount of assets). Does anyone know what their plan's recordkeeping fees are as a basis of comparison?
Title: Re: 401K Recordkeeping Fee
Post by: NoStacheOhio on December 14, 2016, 01:04:26 PM
My megacorp (~50k employees) doesn't have any extra fees. Just the fund ERs.
Title: Re: 401K Recordkeeping Fee
Post by: Phenix on December 14, 2016, 01:29:40 PM
I would say it is reasonable.  I've worked for small companies that pick up the tab for employees and I've worked for very large companies that make their employees pick up the tab (seems opposite of what it should be, right?).  My wife pays $12.50 quarterly for the 403b maintenance fees at the place she works for and they have at least 10,000 employees.  That's $500k in maintenance fees on top of all of the high expense ratio funds they offer (luckily they are getting a couple Vanguard Index Funds starting in 2017).
Title: Re: 401K Recordkeeping Fee
Post by: VoteCthulu on December 14, 2016, 03:38:31 PM
My 401k charges a flat administration fee of $22/yr per account (although everyone has two accounts because they deposite the company contributions into a separate account for no apparent reason).

Paying 0.3% is high, but still a lot better than companies that only offer 1.5% or higher ER funds.
Title: Re: 401K Recordkeeping Fee
Post by: gimp on December 14, 2016, 10:01:55 PM
0.30% seems abnormally high. I feel like Vanguard or Schwab could handle a 401k, even for a relatively small value like $35m, for a much lower admin fee.

$35m x 0.30% = $105,000 per year. That's a full-time salary and benefits and overhead. I find it hard to imagine that they need a full-time person to handle such a small number.
Title: Re: 401K Recordkeeping Fee
Post by: Rubyvroom on December 15, 2016, 06:46:41 AM
Thanks for the replies. I am curious if my company is getting hosed or if we're just too small of an account to get a better rate. They had switched 401K providers a few years ago and I wish I knew what they/we were paying back then, but unfortunately I wasn't high enough level to be involved in those discussions at the time.

Earlier this year I had mentioned to my boss that we had an investment option in the HSA that they've never communicated with employees, and it might be good to ask HR to mention it so people know they can invest those funds. She's like 5 years away from retirement and she was like, "What? You can invest those funds?!" I had to go out to the website and show her. She had no idea she could invest her HSA... there's not a lot of solid communication coming from my company, like the 0.30% recordkeeping fee that doesn't seem to be posted anywhere  -_-
Title: Re: 401K Recordkeeping Fee
Post by: SquashingDebt on December 17, 2016, 07:11:45 AM
My company is switching 401k providers this month and our new administrative/record-keeping fee is .92% of account balances, on top of fund ERs.  I felt like this was high, and it seems like I might be right.  The good news is that now at least we have Vanguard index funds available, instead of just super high ER managed funds.