Author Topic: Mass Mutual 401K Choices  (Read 17388 times)

GTiCy

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Mass Mutual 401K Choices
« on: September 15, 2014, 11:03:26 AM »
My company just changed over to Mass Mutual 401Ks. I am having trouble picking funds to invest in. I currently have a Vanguard IRA, invested in the Target 2050 fund. I picked the Blackrock  Lifepath 2055 for my Mass Mutual 401k. Then as I learned more about investing, I looked at the fees for Mass Mutual 1.10% vs Vanguard  0.18%. I am trying to figure out if I am paying to much in fees and need to change things up. Would I be better off picking somthing like the Nuveen Equity Index R3 with and expense ratio of 0.87%  for the 401K? All of the Mass Mutual funds have an additional 0.90% program adminitraion charge on top of the expense ratio.  Here is a list of the funds offered by my company:

Large Cap:            
Nuveen Equity Index R3 0.87%
Jpmorgan US Equity R2 1.22%
Allianzgi NFJ Dividend Value R 1.30%
American Century Growth R 1.47%

Mid Cap:
Nuveen Mid Cap Index R3 1.00%

Small Cap:
Bny Mel Dl Sm Cap Stock Ind R 0.84%
Invesco Small Cap Equity R  1.54%
MFS New Discovery R2 1.57%
Victory Small Co Opportunity R 1.57%

International/Global:
MFS Research International R2 1.43%
American Funds Europac Growth R1 1.61%

Asset Allocation/Balanced:
BlackRock LifePath 2055 A  1.10% (Others offered, but this is the fund I am currently in)

Bond:
Bny Mel Dl Agg Bond Index R 0.73%
PIMCO Total Return R 1.10%
Franklin High Income R 1.12%
The Hartford Inflation Plus R3 1.20%

Stable Value/Money Market:
Jpmorgan Prime Money Mkt Cashmgt 0.96%

Specialty:
Oppenheimer Real Estate R  1.62%

Asset Allocation/Balanced:
The Htfd Balanced Income R3 1.24%

Fuzzy Buttons

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Re: Mass Mutual 401K Choices
« Reply #1 on: September 15, 2014, 01:41:52 PM »
Wow.  Those options are  ...  not good.  I had to look up the "Nuveen Equity Index R3" to confirm that it is, indeed, an S&P 500 index fund with an expense ratio of .86%.  For reference, my 401(k) offers Fidelity's Spartan S&P 500 index fund at an expense ratio of .07% to do the exact same thing.  Not bragging, just wondering how in the world they justify charging so much to just follow a very basic index.

Well, if all your horses are donkeys you might as well pick the tall one.  I'd say use the Nuveen Equity Index R3 for your large cap domestic, and "Bny Mel Dl Sm Cap Stock Ind R" (which is indeed a Russell 2000 index with a .84% ratio) if you want to put some small caps in as well.  I have no idea what your preferred asset allocation is, but those seem like the least bad choices you have.  There's "Bny Mel Dl Agg Bond Index R" in there for bonds as well.

I was going to say with higher fees you might as well check out the actively managed funds as well.  But they've still got a .5% higher premium, so there doesn't seem much point.

Fortunately, most of building a stash is about savings, and only a little bit about investing.  And higher fees in a 401(k) will still usually beat paying income tax and then using an after-tax account.  So I'd still do it.  But, after getting any match your company does, I'd definitely fill the Vanguard IRA first.

And see if you've got any investment savvy co-workers who might be willing to join you and go to your company management and ask about getting a better deal.  That depends on how approachable your company is to stuff like that, of course.  It's part of compensation, so no different than asking for a raise, I figure. 
« Last Edit: September 15, 2014, 01:45:52 PM by Fuzzy Buttons »

GGNoob

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Re: Mass Mutual 401K Choices
« Reply #2 on: September 15, 2014, 01:42:48 PM »
All of the Mass Mutual funds have an additional 0.90% program adminitraion charge on top of the expense ratio.

So another 0.90% on top of that 1.10%?

Those are some extremely expensive index funds. You certainly could go with the Nuveen Equity Index if you wanted to and could try to make up for the international exposure in your IRA. Otherwise you could build your own 90/10 portfolio with US, International, and Bond index funds and be about 1.01% to save a little. Even cheaper than just the Nuveen large Cap index would be to do the US large cap Index, Small Cap Index, and Bond Index.
« Last Edit: September 15, 2014, 06:24:07 PM by Logan T »

Jags4186

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Re: Mass Mutual 401K Choices
« Reply #3 on: September 15, 2014, 05:29:31 PM »
I too have a Mass Mutual 401k plan with awful choices...although I have a .56% S&P500 index fund.

I can assure you that not all Mass Mutual 401k plans have that .9% administrative fee...mine does not.

Your bosses are also contributing to this garbage as well so I would bring it up.

RichMoose

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Re: Mass Mutual 401K Choices
« Reply #4 on: September 16, 2014, 11:27:39 AM »
Wow! This is highway robbery. With your plan fees you're paying ~1.8% for the S&P 500 and that's pretty much your cheapest option. Like the other posters said, you definitely need to bring this up with your bosses and HR. Anywhere else you can get the S&P for .30% tops and that's expensive. If HR understands that this company is charging 5x the fees you should be paying maybe they'll think about it, it's their 401(k) as well.

In the meantime, don't contribute anything over the amount to max your company match. I would go with Nuveen Equity R3 & the BNY Bond. Use your own Vanguard IRA to get that middle market with VIMAX.

Fortunately I'm not in this boat, but many companies with RRSP plans in Canada using the big companies up here are paying between 2.5% - 3.5% with their plans. Now that hurts! Especially if you pick a bond fund with them.

okashira

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Re: Mass Mutual 401K Choices
« Reply #5 on: September 16, 2014, 11:54:04 AM »
That crap should be illegal.

DO a favor, once you get a decent 401k balance, find another job and be sure to tell them this is why.

And don't put in more the min needed to get a the match, unless you're going to leave the company fairly soon anyway and your income will be high this year.


Man, with the acct fee on top, some of those fund will come to 2.5% ER.
Basically they will recover your entire 401k balance as fees if you keep it with them for 40 years.

« Last Edit: September 16, 2014, 12:03:06 PM by okashira »

okashira

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Re: Mass Mutual 401K Choices
« Reply #6 on: September 16, 2014, 12:05:39 PM »
I noticed you have PIMCO total return as a bond fund, I happen to have that one as an option in my 401k, too.

However mine is 0.46% + 0.07% = 0.53%
Yours is 2.00%
For the exact same fund.

Yeah, that's theft.

GTiCy

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Re: Mass Mutual 401K Choices
« Reply #7 on: September 19, 2014, 11:18:52 AM »
I called Mass Mutual about the program adminitraion charge. They looked at the prospectous and told me that they charge only the expense ratio. They said that the 0.90% program adminitraion charge is included in that total. However, this charge is not listed on the prospectous. I don't know if they gave me an honest answer. I found out that because my 401k is a roth, I can roll it over into vanguard as often as I want. I am thinking about dumping it every year. Sound good?

Anyway I am still looking to change to the S&P 500 index regardless, since it is the cheapest. My question how can I diversify my porfolio accross all of my accounts? Here are my accounts.

Employer 401K:
Blackrock Lifepath 2055 A 1.10%

Traditional IRA (rollover):
Vanguard Target 2050 0.18%

Roth IRA:
Vanguard Target 2050 0.18%

Taxable:
VTI
VOO
VXUS
« Last Edit: September 19, 2014, 11:22:26 AM by GTiCy »

RichMoose

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Re: Mass Mutual 401K Choices
« Reply #8 on: September 19, 2014, 11:40:29 AM »
I would definitely hold VXUS in your taxable account only. Why VTI & VOO? The companies in VOO make up the majority of VTI so just go with VTI; unnecessary complication if you ask me.

If you are moving your 401(k) to the S&P 500 only, then consider a higher percentage of bonds in your IRA accounts. You may also consider more VXUS and less VTI in your taxable.

What is your desired asset allocation stock/bond and for stocks US/international?

GTiCy

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Re: Mass Mutual 401K Choices
« Reply #9 on: September 23, 2014, 04:00:17 PM »
I am single and I am in the 25% tax bracket. My asset allocation is aggressive: 95% stocks, 5% bonds. I have maxed out my Vanguard IRA for the year. My company matches 4% if I put in 5%, which I am doing. I put about half of my paycheck into my taxable account at Vanguard. I figured I need to put more money into a tax deferred account (401K). Even with the 2% in fees, I think it would be worth it, if only for the tax savings. I figured why put money into my taxable account, when I could be differing the taxes with my 401K. Do the fees seem so high that this would not be worth it in the long run?

GTiCy

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Re: Mass Mutual 401K Choices
« Reply #10 on: September 27, 2014, 11:15:57 AM »
I am thinking about doing a mix of large, mid, and small cap indexes, as well as an interational index. Being that my 401k is a small part of my portfolio at this point, I am not going to add any bonds. I am already holding bonds in my two  target date funds at Vangard. What would be a good mix of these funds?

Large Cap: Nuveen Equity Index R3  (I am thinking a large percentage here)
Mid Cap: Nuveen Mid Cap Index R3    
Small Cap: Bny Mel Dl Sm Cap Stock Ind R    
International: MFS Research International R2 ( I am thinking about 15% here)

I have read that some people dont hold mid caps, they say between the large and small caps that they have things covered. With a mix of these funds, it would drop my fees by a bit. Thanks for the help so far.
 

okashira

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Re: Mass Mutual 401K Choices
« Reply #11 on: September 27, 2014, 03:15:35 PM »
I am thinking about doing a mix of large, mid, and small cap indexes, as well as an interational index. Being that my 401k is a small part of my portfolio at this point, I am not going to add any bonds. I am already holding bonds in my two  target date funds at Vangard. What would be a good mix of these funds?

Large Cap: Nuveen Equity Index R3  (I am thinking a large percentage here)
Mid Cap: Nuveen Mid Cap Index R3    
Small Cap: Bny Mel Dl Sm Cap Stock Ind R    
International: MFS Research International R2 ( I am thinking about 15% here)

I have read that some people dont hold mid caps, they say between the large and small caps that they have things covered. With a mix of these funds, it would drop my fees by a bit. Thanks for the help so far.

Stick with the lowest ER fund in your 401k if you can. Balance it out with your IRA and taxable investments. What I mean is, if your lowest ER in the 401k is a large cap, then buy 100% of that. Then in your IRA/taxable, you can weigh those toward small cap / international / reit as you see fit to get the percentages you want.
Of course you do want to try to keep REITs and international stocks and bonds in a tax free plan (roth / ira / 401k) and domestic index funds are good for taxable, so you have to balance that too.

YOu are right that even with the high fees its still probably worth it to max your 401k because of the tax advantage. Just don't work there forever, and roll it to an IRA right away.
This is an ER forum after-all, so that should work out. :-D