Author Topic: Great West 401k  (Read 2023 times)

b_b

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Great West 401k
« on: January 28, 2016, 01:17:19 PM »
Hello all,

Long time lurker, first time posting.
First off I want to thank everyone on this website for the information and discussions.

My question is a little bit about my companies 401k and I guess plans in general.
As of the last few years our company has added quite a few employees and we have now hit the magical $1mil asset mark which opens up a plethora of available fund choices.
Through a few meetings our company heads along with myself have come up with a few funds to swap into our selection (some VG index's).
Along with this increase in assets and these funds changes our plan asset charges have also increased, something along the lines of .60 to .63
Each fund still has its own individual ER which is not seen by the individual, but quarterly each individual is also charged this asset based charge from Great West for being the plan admin i guess.
My question: Is this action by GW to increase the asset based charges for the changes to our plan pretty standard practice or should we be looking at some other options or at least questioning the changes?  Let me know if I need to try to explain better or clarify anything?

Thanks in advance.

Trudie

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Re: Great West 401k
« Reply #1 on: January 28, 2016, 01:52:58 PM »
I would question the charges, and all 401K plans are required to disclose them annually under IRS rules.  Ask your HR department for a copy of the report.

I administer my company's 401K plan and we used to be with Great West.  We ditched them after I did a review of the fees.  The fees to the employer under the Great West plan and our new plan are about the same.  The difference came in within the funds themselves -- all those buried expenses that employees pay that aren't easy to follow and readily apparent.  So it's not like the employer is pocketing the savings, it's just that the hidden fees aren't eroding our employees' returns, unbeknownst to them.

Great West had higher record-keeping, investment management, and trustee fees that were mostly buried in the funds and costing our employees an extra $15K per year.  This is borne out by the expense ratios of the various funds, which were markedly lower.  Under the new arrangement we also became a participant in a large group plan (through a professional association) and gained access to more funds, and institutional classes of funds.

I don't know what size employer you work for, but our group was small (less than 25 participants).  By joining with a large group plan (offered through a professional association) we gained access to more options and oversight from a board.  I have more confidence in that sort of group to make decisions about plan offerings than a locally controlled panel -- which often consisted of me, our manager, and a representative from Great West.

Ask questions...

b_b

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Re: Great West 401k
« Reply #2 on: January 29, 2016, 11:02:21 AM »
Thanks for the input Trudie
We have made the switch on the a lot of the Great West funds to VG equivalents with much lower ER, so the expenses related to the funds themselves will see a decrease (even though the typical participant won't ever actually "see" it).
The fees I'm questioning are seen under the list of transactions page on my login every quarter as "asset based charge". 
This is a percentage that comes out of every participants account based on assets in our personal accounts and goes directly into GW's pocket.
For instance even if i was invested only in VG funds, which of course I plan to be once our changes go through, GW would still collect this "asset based charge" because they are the plan administrators.
For example let's say my account currently consists of about $45-50k, this "asset based charge" from GW every quarter currently costs me ~$60-70.00, this is in addition to the fees I'm paying on each fund individually (which are the fees participants don't typically see).
And now that we have hit the $1mil mark in participant holdings we have opened up a very large list of possible funds to choose from.
We have exchanged quite a few GW funds for VG funds because of the lower cost and performance.
But now GW gets to go back and re-evaluate our rates for these asset based charges based on our new fund picks.
It seems to me that if GW can't get their money from our fund choices (because we have swapped them out for better choices) by only allowing us to pick GW funds, they will essentially just make up the difference by raising our asset based charges.
Seems sketchy to me I just wanted to pick some experienced brains and see if this is standard practice or not.
This just popped into my head.
Our first change which took place in 4th quarter 2015 was to swap out GW S&P 500 index fund for the VG S&P 500 index fund.
GW was charging .60% ER for this fund vs VG .05%, my question is - instead of losing the participants in the GW fund, why doesn't GW agree to negotiate a lower ER on their fund?
OR BETTER YET OFFER A LOWER ER IN THE FIRST PLACE?!
Seems like an easy solution to keep folks around, but at the same time I know there are a lot of people who just go with the flow and don't dig into anything 401k related so perhaps i just answered my own question - it's essentially just a cash cow for GW to charge that higher %...?

b_b

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Re: Great West 401k
« Reply #3 on: July 01, 2016, 05:59:14 AM »
As our journey continues on this project we've made some recent discoveries into our current plan with Great West/Ameriprise.
Some of the fees our participants (me included) have been paying have finally come to surface:

.63 paid to Great West
.75 paid to Ameriprise
.95 avg fund fee expense from GW

On top of this of course the company also pays GW yearly for the plan.

As i said before we did make some changes and brought in some Vanguard options, so for a few of us the avg fund fee expense is lower.
But for amost of our employees who are in a GW target date funds they are paying ALMOST 2.5% IN FEES?! Is this correct?

Just looking for some input. 
Thanks

Greenpez

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Re: Great West 401k
« Reply #4 on: July 01, 2016, 06:57:03 AM »
 this thread is frustrating to me for a different reason. I work for a company with ~130k employees and i have ... 9 options in my 401k, one being company stock. I don't know even who to talk to about this. Local HR has no answer and no apparent desire to find one.

 not trying to derail the thread, just see ppl with knowledge from an admin perspective.