Need 401k Help - Voya ABA Plan

[ejchis]

Removed.

[Zaga]

How long do you expect to be at that firm?  Those fund options aren't terrific, but I've seen much much worse!  The less time you'll be at that company, the less time those expense ratios will be there because when you leave you can roll over to an IRA with low fees.

If you want to keep it simple, for now I'd go with the All Cap Index Equity Fund and the Bond Index fund, in percentages that make you happy.  You could even skip the bonds if you want all stocks.

I'd want to know more about the brokerage plan fees.  Is that fee a one time thing?  Annual?  For each investment?  See, it could easily get out of hand if you're not checking.

[MustacheAndaHalf]

Contribute to get the maximum company match - that's incredibly valuable owing to the 50-100% extra you gain.

You can do fairly well outside a 401k when investing in stock funds.  If you don't sell, VTSAX will only tax you on dividends plus some LT/ST gains they experience during the year.

In general when I hear Voya I think high fees.  Vanguard doesn't pay for TV ads, Voya does.  That money needs to come from somewhere, and those 0.71% expense ratios are a good example.  The money you invest that does not get matched is probably better off in a lower cost funds.

You might point out the Supreme Court decision on administering 401k.  The decision was that 401k administrators must look for improved expense ratios on an ongoing basis.  If they keep the same lousy expense ratios, the breach of fiduciary duty is ongoing, and resets the statute of limitations.  Basicly, they don't get forgiven if they wait it out - they need to improve expense ratios or risk breaching their legal duty to you as a 401k participant.

[Blonde Lawyer]

Thanks for posting this.  I'm in the same plan.  Currently, I'm split between the 2040 and the 2050.  However, after looking at the annual disclosure, I'd like to put a chunk in the large cap index equity fund.  Since 2009, it hasn't had a negative year and inception to date annualized its at 17.29%.  Inception to date on the 2040 is only 5%.  I'm new to investing.  Can anyone explain what a large cap index equity fund is? Thanks.

It's funny, when I google all the promotion materials for the ABA funds BRAG about the low .8% expense.  Makes me wonder what the really bad ones are.

[NoStacheOhio]

Thanks for posting this.  I'm in the same plan.  Currently, I'm split between the 2040 and the 2050.  However, after looking at the annual disclosure, I'd like to put a chunk in the large cap index equity fund.  Since 2009, it hasn't had a negative year and inception to date annualized its at 17.29%.  Inception to date on the 2040 is only 5%.  I'm new to investing.  Can anyone explain what a large cap index equity fund is? Thanks.

It's funny, when I google all the promotion materials for the ABA funds BRAG about the low .8% expense.  Makes me wonder what the really bad ones are.

Large cap index equity fund typically means a fund that holds all of the companies in the S&P 500 according to their size. The S&P 500 is made up of the largest 500 publicly-traded companies in the U.S.

The advantage you'd have with something like that All-cap index fund is that it holds all of the companies in a much larger index (there are a few, but for the sake of argument, let's say Dow TSM). So you've got those 500 largest companies, plus all the other, smaller companies that are publicly traded in the U.S.

[RWD]

I think it's still better to keep this money from being taxable, even with the management fees.

That depends on how long you stay at the company. Have you run some calculations? Given a sufficiently long time frame the high fees can eclipse your tax savings.

[NoStacheOhio]

I think it's still better to keep this money from being taxable, even with the management fees.

That depends on how long you stay at the company. Have you run some calculations? Given a sufficiently long time frame the high fees can eclipse your tax savings.

The index fees aren't high enough to offset tax savings.

[RWD]

I think it's still better to keep this money from being taxable, even with the management fees.

That depends on how long you stay at the company. Have you run some calculations? Given a sufficiently long time frame the high fees can eclipse your tax savings.

The index fees aren't high enough to offset tax savings.

Yeah, you're probably right. I just did some rough spreadsheet calculations (assumptions: 25% income tax bracket when employed, 0% tax bracket during withdrawal, 7% annual total return, .65% ER in 401k, .05% ER in taxable, 2% dividend payments) and came up with 103 years for the taxable account to break even. Even assuming 15% tax bracket for withdrawal it takes 46 years. These were just quick, rough calculations with a lot of assumptions though.