Author Topic: Help getting away from JH Pensions  (Read 4290 times)

DodgerStache

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Help getting away from JH Pensions
« on: March 30, 2015, 12:32:50 PM »
Hi all,

I just want to run something by the Mustache experts. Here are the basics: I switched jobs last year and am now eligible to contribute to the 401k match as of 1/1/15. In looking at all my options with John Hancock, I noticed a very disturbing trend of high expense ratio funds. All of them seemed to be in the 1.32 to 1.48 range. Based on that, I started researching as to why that would be the case and word on the street is that the ratios are high because my employer is cheap and wants the employees to pay for the 401k administrative expenses. Not cool - I'll bring it up with the CFO soon.

The rest of my money from my previous employer is safely tucked away in the Vanguard Target Retirement 2050 fund at a .07 expense ratio and Id like the money Im contributing with my current employer to end up in the same Vanguard funds. I have no experience pulling money from one active 401k into another but is this something I can do? If so, how often can it be done? Any stories or experiences would be great.

Thanks in advance!

anon-e-mouse

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Re: Help getting away from JH Pensions
« Reply #1 on: March 30, 2015, 01:06:53 PM »
You have to ask the person who manages the 401k in your company to reach out to their rep at JH.
The JH rep will let you know if inservice rollovers are allowed (if you want to roll your 401k to an IRA with Vanguard)
I'm in the exact same spot as you and have been playing phone tag with our JH rep for a week now.

JH fees suck but I've seen worse.

DodgerStache

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Re: Help getting away from JH Pensions
« Reply #2 on: March 30, 2015, 03:10:16 PM »
Thanks! I'll get in touch with our JH representative.

forummm

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Re: Help getting away from JH Pensions
« Reply #3 on: March 30, 2015, 06:31:45 PM »
The fees are high, but lower than the taxes you'd have to pay. You can still max out the account each year and then just rollover the funds to a Vanguard IRA as soon as you leave that job.

Chuck

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Re: Help getting away from JH Pensions
« Reply #4 on: March 31, 2015, 12:36:40 AM »
I don't think JHP allows inservice rollovers. I tried so hard to get my company to switch, but I failed...

At least I should be moving on to a new job soon.

DodgerStache

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Re: Help getting away from JH Pensions
« Reply #5 on: March 31, 2015, 09:39:46 AM »
Unfortunately, I think you're right. It's a small company and, despite it being stocked full of former CPAs and finance consultants, nobody seems to blink at the expense ratios (which, my estimate, has a built in admin fee of 1.25%).

Thanks a lot for the feedback!

anon-e-mouse

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Re: Help getting away from JH Pensions
« Reply #6 on: April 09, 2015, 10:22:35 PM »
Our JH rep confirmed no inservice rollover "until 65".
And my question about adding post-tax contributions?.... "up to $1800 per year total".
I don't think my rep understood the questions.

DodgerStache

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Re: Help getting away from JH Pensions
« Reply #7 on: April 14, 2015, 01:46:41 PM »
Yeah, I received the same "65+" message from our rep. Really lame, but makes sense as to why they do it.

chrysanthemum72

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Re: Help getting away from JH Pensions
« Reply #8 on: May 04, 2015, 04:25:13 AM »
I'm in the same boat here very concerned about high expense ratios at JH. I'm currently getting an employer match of 100% up to 4%, but due to very high JH plan fees I think I'm actually losing money compared to a Roth IRA. During the last quarter, my plan charges totaled 30% of my return at JH. I think the high expense ratios were already factored in, since my ROR was only 2.2%.

I did some compariosn using Bankrate's 401k and Roth IRA calculators. I inputted the same contribution amount for both 4% of my annual income for the 401k plus 4% employer match, and 8% after tax income in the Roth IRA. I'm 24 years old and my salary is 70k, so the comparative after tax contribution for the Roth is $4200 (70k * 8% contribution * 75% for taxes). On the Roth, I assumed 7% ROR (the default) and for the 401k, I subtracted 30% from the ROR for plan fees, totaling 5.09%.  I did not assume any increase in contribution for either, nor did I add any pre-existing balance.

Comparing the two results until I'm 59, I would make about $90k more on the Roth IRA when I'm 59. It's true that I'm contributing more money since I'm giving up the employer match, but I calculated that it's only $50k more expensive (assuming annual contributions for 35 years of $2800 for the 401k and $4200 for the Roth). So I'm net ahead $40k if I forego the employer match and get hit with 25% taxes upfront for the Roth IRA. Does this make sense? Does my math add up? Should I cancel my 401k contributions and go for a Roth IRA until I have access to a better 401k plan?