Author Topic: Edward Jones 401k help!?!  (Read 3531 times)

piccione88

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Edward Jones 401k help!?!
« on: June 05, 2015, 10:02:44 AM »
 I recently started working for a small trucking company.  My probationary period is over, and I can set up my 401k in a few weeks. The employer matches up to 3%, but they use Edward jones.
 I would like to set up a SIMPLE IRA if possible to avoid EJ fees. Does anyone ha e any suggestions on my best course of action?
 My situation is I'm 27, single, just recently started trying to bring sanity to my financial life. Have 18k in debt(was 25k three months ago) 3k in emergency money, and 1k in betterment 90/10...also have no bills other than food and cellphone(no housing cost, no car, etc etc) and my gross pay varies between 1500-2000 weekly.also if it's relevant I ussually live off less than 300 weekly, and will be putting max contribution to hsa as soon as health plan kicks in
« Last Edit: June 05, 2015, 10:54:09 AM by piccione88 »

GGNoob

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Re: Edward Jones 401k help!?!
« Reply #1 on: June 05, 2015, 10:41:13 AM »
What are the fees with the 401k and what fund options are available (with expense ratios)?

piccione88

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Re: Edward Jones 401k help!?!
« Reply #2 on: June 05, 2015, 10:57:13 AM »
 Honestly I don't know. I won't know until I get back to the yard next week. I was operating under the assumption that Edward Jones was too costly regardless. I can update this when I have more info ifsticking with EJ could be my best course.
 Sorry I am really new to all of this.

dandarc

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Re: Edward Jones 401k help!?!
« Reply #3 on: June 05, 2015, 11:10:07 AM »
As an employee, you can't just set up a SIMPLE IRA - that is an employer sponsored plan, and presumably could be done at Edward Jones even more easily than a 401K.

So, given that you can't just choose your workplace retirement plans, if you want better choices, you need to influence the owner(s) / management to change plans.  As a new employee, that may or may not be a can of worms you want to open right now.

Given the 3% match, and depending on your income, the 401K likely has to be really, really bad to make forgoing a logical choice.  Come back when you have the 401K documents and know all of the options and fees, but assuming it isn't a "really, really bad" 401K, and merely a "bad" 401K, you might prioritize as follows:

1.  401K to get match
2.  Pay off debt if that is your goal - if it is low-interest debt, a lot of people here would hang on to it as long as possible
3.  Traditional or Roth IRA - that decision boils down to tax rate now vs. expected tax rate in the future - so the higher your income, the more you'd lean traditional on this
4.  Seriously evaluate the 401K - might go back to this if it isn't too bad of a deal and your tax rate is high enough to make it worthwhile
5.  Taxable investments

kpd905

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Re: Edward Jones 401k help!?!
« Reply #4 on: June 05, 2015, 04:14:04 PM »
I was operating under the assumption that Edward Jones was too costly regardless.

Probably not if they offer a match.  It will probably make sense to at least contribute up to the match.

TomTX

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Re: Edward Jones 401k help!?!
« Reply #5 on: June 05, 2015, 07:14:06 PM »
If your employer has a dollar-for-dollar match, here is how it will work, using an example of a 401k manager who is raping you for 5% load and 2% per year.

In the first year:

You put in $1,000
Your employer matches with $1,000
EJ takes $140.

So, you put in $1,000 and you end up with $1,860.

...now, EJ is going to be taking their 2% every year of everything, but you will probably leave that company at some point, and call up Vanguard Concierge Services to set up a direct rollover to an IRA.

Indexer

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Re: Edward Jones 401k help!?!
« Reply #6 on: June 05, 2015, 10:01:36 PM »
The match is free money, and Simple IRAs are always 100% vested.  So no matter how bad the EJ options are you are almost always in good shape taking the match. So you should probably at least invest enough to get the match.  Once you get the match I would focus on paying down debt and then investing outside of the EJ plan.

Now that being said here is what to watch out for.

Loaded funds:  These can have 4-5% fees just to buy them.  If you can avoid these.

12b1 fees:  Since it is an employer plan set up by EJ I can just about guarantee most of if not all of the funds will have 0.25-0.5% 12b1 fees.  These are what compensate the advisor for setting up the plan.  You probably won't be able to avoid these, and because of them the expense ratios on most of the funds will probably be in the 1-2% range.  For comparison a 401k run by Vanguard would probably have funds in the 0.05-0.20% range.