I am preparing to roll a $25k tIRA into my 80k 401(k) so that I can do a backdoor roth conversion later this year. Was poking around for the form and decided to open up my statement page on a whim. I usually track the balance etc in Mint or on the summary page available in the Wells Fargo system. I was surprised to see an “Asset Fee” of $67.65 that is being charged quarterly(Was $70.37 last go round). I tried to research this and didn’t have much luck.
My additional fee information page contains just these –
Participant Florida Stamp Tax 0.35% Stamp Tax Each
Participant Loan Maintenance Fee $8.25 Loan Fee Quarterly
Participant MA Morningstar(MS) Fee* 13.00 bps Advice Track Fees Annually charged monthly
Participant MA Wells Fargo(WF) Fee* 50.00 bps Advice Track Fees Annually charged monthly
I don’t participate in the MA Advice track, have no loan and not sure on the Florida Stamp Tax.
I thought I was going to get by without needing the 401k evaluation, sticking to the index funds and being happy. We had no company match until this year, but are now eligibile for a 3% match. I was planning to roll a tIRA into the account so that I can do backdoor roth’s, but then discovered this fee situation. I had been entirely in the s&p blackrock fund(ER 0.04%), but am now in a mix of that and the Vanguard Small Cap index(ER 0.10%).
I called Wells Fargo, and the customer service rep was unhelpful, had to put me on hold twice to tell me he couldn’t tell me what the asset fee was based on and to contact my company rep.
Reached out and got sent the fee change notice from earlier this year(which I had ignored), which indicates
“Attached is a document that was sent to employees and explains the fee changes effective January 1, 2014. Hopefully this helps explain the fees, which were reduced.“
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Types of costs associated with the plan
There are three general types of fees associated with the plan: administrative fees, individual service fees, and investment fees.
Administrative fees are those payable to Wells Fargo for the costs associated with running the plan and cover the cost of services such as recordkeeping, mailing statements, account access, and transaction costs.
Individual service fees are associated with optional features offered in the plan. For instance, the service fee to cover individual transactions such as loans.
Investment fees are costs associated with managing the investment options offered in the plan. Each investment is managed by an advisor who is responsible for investing the fund’s assets, implementing its investment strategy, and managing the day-to-day operations. The investment fee is paid to the advisor for these services. Often these fees are referred to as the fund’s expense ratio and are shown as a percentage of the fund’s total investments. For example, if the expense ratio for a fund is 0.20%, that equals $2.00 for every $1,000 invested. The fees and expenses represented by the expense ratio for a fund are applied at the fund level and are already reflected in the fund’s published return percentage.
Occasionally, funds offer fee waivers or expense reimbursements. When this happens, there will be a difference between the gross expense ratio and the net expense ratio. The gross expense ratio is the fund's total annual operating expense ratio. The net expense ratio is the gross expense ratio minus any fee waivers or expense reimbursements. The net expense ratio is the actual expense ratio that you pay while invested in the fund.
Effective January 1, 2014, if you are invested in either of the funds listed below, you will now pay a lowered wrap fee. The current wrap fee will be decreased from 0.50% to 0.30%, this fee represents an overall reduction in the plan administrative costs paid to Wells Fargo.
• Wells Fargo Stable Return Fund N*
• Wells Fargo/BlackRock S&P 500 Index Fund N*
Do I keep kicking at HR to get some more detail on the fees and how they are calculated(is that an annual 0.30% or monthly, what are the fixed dollar costs, etc) or just suck it up and accept it? I’d heard and read some about the insidious hidden fees, but really counted myself lucky to have some low ER index fund options, and had even clicked on the “additional fee” page before and nowhere is a wrap fee mentioned. I’m thinking even with the additional fees that it makes sense to roll the tIRA over to the 401k(out of VTSAX with Vanguard right now) so that I can continue to make Roth contributions, but
For the record these are my fund choices -
Wells Fargo Stable Return Fund N
Pimco Total Return/A
Invesco Growth and Income Fund R
WF/ BlackRock S & P 500 Index CIT N
Thornburg Intl Value/R5
MainStay Large Cap Growth R1
Ivy Fund-Mid Cap Growth A
Artisan Mid Cap Value Fund Inst.
Laudus Mondrian Emerging Markets Instl
Vanguard Small Cap Idx/Signal