Author Topic: How much is a Fidelity 401K worth vs Voya  (Read 715 times)

ericrugiero

  • Pencil Stache
  • ****
  • Posts: 732
How much is a Fidelity 401K worth vs Voya
« on: September 29, 2021, 07:10:05 AM »
It looks like I may have a job opportunity that sounds very good in most respects.  The biggest down side is that my 401K provider would change from Fidelity to Voya.  My Fidelity 401K was set up by someone who knows what they are doing.  It includes good funds (including low fee index funds), Traditional & Roth 401K, Mega Backdoor Roth, and is just overall a good 401K.  I've called customer service a few times and they have been fantastic.  Fidelity also runs our HSA and we have access to all the same funds. 

I don't have any experience with Voya but some quick internet research shows they commonly have higher fees and fewer good fund options. 

How high a priority would you place on this step back?  Obviously, I won't roll my existing money into Voya, it would just be any new contributions.  The new company offers 0.5% higher match so that could offset some fees but it won't take very many years of higher fees to eat up 0.5%. 

achvfi

  • Bristles
  • ***
  • Posts: 329
  • Location: Midwest
  • Health is wealth
Re: How much is a Fidelity 401K worth vs Voya
« Reply #1 on: September 29, 2021, 07:57:55 AM »
I had Voya, I dont think its as good as Fidelity, but it still had few very low cost passive index funds (s&p500, small Mid Cap, international), low cost target date funds and actively managed funds. So it was acceptable.

It had in service withdrawals and Mega backdoor Roth but we had to send documentation manually through mail. No automated options for that.

Mostly it depends on your employer as well.

I think you should be alright with Voya.

RWD

  • Walrus Stache
  • *******
  • Posts: 5107
  • Location: Mississippi
Re: How much is a Fidelity 401K worth vs Voya
« Reply #2 on: September 29, 2021, 09:39:00 AM »
How much the difference is depends on the fees, how much you're contributing, and how long your money will stay in the plan. Also, if they offer in-service rollovers that negates any fee compounding concerns.

But as a rough guesstimate I'd put the value difference at ~$7k (assumption of maxing 401k for a decade with 0.5% higher fees).

ericrugiero

  • Pencil Stache
  • ****
  • Posts: 732
Re: How much is a Fidelity 401K worth vs Voya
« Reply #3 on: September 30, 2021, 07:07:38 AM »
How much the difference is depends on the fees, how much you're contributing, and how long your money will stay in the plan. Also, if they offer in-service rollovers that negates any fee compounding concerns.

But as a rough guesstimate I'd put the value difference at ~$7k (assumption of maxing 401k for a decade with 0.5% higher fees).

Thanks, I ended up googling a 401K calculator and played with the ending amount after maxing out a 401K for 10 years.  The difference between 7% & 7.5% returns (to approximate a 0.5% difference in fees) was right around $7,000.  But, the extra 0.5% match offsets that almost exactly.  I'm guessing that if I stayed longer the larger balance in the 401K would cause the fees to grow and have a bigger impact than the extra match.  That's not a big concern for me because I expect to be there less than 10 years anyway. 
« Last Edit: September 30, 2021, 08:53:55 AM by ericrugiero »

clarkfan1979

  • Magnum Stache
  • ******
  • Posts: 2539
  • Age: 42
  • Location: Pueblo West, CO
Re: How much is a Fidelity 401K worth vs Voya
« Reply #4 on: October 01, 2021, 10:27:31 AM »
I have Voya through my employer 401a. I'm not very impressed with their funds or customer service.

For my previous employer, I had TIAA, who I liked much better.

If you are getting an extra .5% contribution from your new employer, worst case scenario would be a "wash" with higher fees.

Xlar

  • Bristles
  • ***
  • Posts: 255
Re: How much is a Fidelity 401K worth vs Voya
« Reply #5 on: October 01, 2021, 01:26:49 PM »
Note that just because a 401k is through a company does not mean that you get access to all their funds! Each employer will have a separate contract with that company for specific options. You need to ask your potential new employer for a list of all the funds offered in their specific Voya 401k plan! Voya can have some decent options but only if the employer's 401k contract with Voya offers them.

Mappocalypse

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Re: How much is a Fidelity 401K worth vs Voya
« Reply #6 on: October 01, 2021, 01:37:31 PM »
The company I'm at has used Voya for quite a while. Your plan may differ, but the only Vanguard fund that they offered was VBIAX on our 401k plan.

But if you check out the prospectus, Voya sneaked in a 0.34% service charge, for which they said, "management fees for daily tracking."
So the Vanguard fund with an expense of 0.07% is now 0.41%.
All other available funds had native expenses of about 0.5% to even 1.2%. Voya tacked on the 0.34% service charge to those, too.


Steeze

  • Handlebar Stache
  • *****
  • Posts: 1122
  • Age: 34
  • Location: NYC Area of Earth
Re: How much is a Fidelity 401K worth vs Voya
« Reply #7 on: October 04, 2021, 07:36:02 PM »
In my experience Voya blows. I work at a small consulting firm and the fees for a vanilla index fund are nearly 2% all in. The target date funds are all over 2% and the specialty funds can reach nearly 3%. That includes the fees Voya tacks on that aren’t included in the funds ER.

Can’t adjust my contributions, no automatic mega back door Roth option, interface is slow as hell, no option to pick my own funds or ETFs.

DW has fidelity at megacorp and her fees are ~0.01% on everything and she has access to 0% fee funds in the brokerage link account. Her company got rid of the after tax and mega backdooor option though, but it used to be automatic. She can invest in anything she wants and adjust her contribution amount anytime she wants.

Voya costs me about $3k per year and counting. Fidelity costs us <$20 per year on a similar balance. Again, probably a small company vs. mega Corp thing, but yeah... Voya blows.

achvfi

  • Bristles
  • ***
  • Posts: 329
  • Location: Midwest
  • Health is wealth
Re: How much is a Fidelity 401K worth vs Voya
« Reply #8 on: October 06, 2021, 09:01:30 AM »
In my experience Voya blows. I work at a small consulting firm and the fees for a vanilla index fund are nearly 2% all in. The target date funds are all over 2% and the specialty funds can reach nearly 3%. That includes the fees Voya tacks on that arenít included in the funds ER.

Canít adjust my contributions, no automatic mega back door Roth option, interface is slow as hell, no option to pick my own funds or ETFs.

DW has fidelity at megacorp and her fees are ~0.01% on everything and she has access to 0% fee funds in the brokerage link account. Her company got rid of the after tax and mega backdooor option though, but it used to be automatic. She can invest in anything she wants and adjust her contribution amount anytime she wants.

Voya costs me about $3k per year and counting. Fidelity costs us <$20 per year on a similar balance. Again, probably a small company vs. mega Corp thing, but yeah... Voya blows.

That is just crazy. Voya 401k I had typically had 0.03% fee for index and target date funds.

This just tells how much it varies with the employer. This is corrupt plain and simple. I suspect someone in your HR admin or management is getting Kickbacks from this.

Steeze

  • Handlebar Stache
  • *****
  • Posts: 1122
  • Age: 34
  • Location: NYC Area of Earth
Re: How much is a Fidelity 401K worth vs Voya
« Reply #9 on: October 06, 2021, 10:07:26 AM »
In my experience Voya blows. I work at a small consulting firm and the fees for a vanilla index fund are nearly 2% all in. The target date funds are all over 2% and the specialty funds can reach nearly 3%. That includes the fees Voya tacks on that arenít included in the funds ER.

Canít adjust my contributions, no automatic mega back door Roth option, interface is slow as hell, no option to pick my own funds or ETFs.

DW has fidelity at megacorp and her fees are ~0.01% on everything and she has access to 0% fee funds in the brokerage link account. Her company got rid of the after tax and mega backdooor option though, but it used to be automatic. She can invest in anything she wants and adjust her contribution amount anytime she wants.

Voya costs me about $3k per year and counting. Fidelity costs us <$20 per year on a similar balance. Again, probably a small company vs. mega Corp thing, but yeah... Voya blows.

That is just crazy. Voya 401k I had typically had 0.03% fee for index and target date funds.

This just tells how much it varies with the employer. This is corrupt plain and simple. I suspect someone in your HR admin or management is getting Kickbacks from this.

As it was explained to me, the company can either pay Voya's admin fees or pass that on to the employee, in our case the employee pays the fees. Then the ER for the funds are based on the total value of the all the 401ks in the company + the underlying ER of the funds themselves. In our case we are in the lowest tier (highest fees) because we are a small company and most of the people have small balances. In any case, my company could choose to pay all the fees aside from the underlying ER, but they do not.

DW's company not only picks up all the admin fees, but they are able to negotiate underlying ER below the publish ER for the funds, because their 401k pool is so large. So she can get better ER inside her 401k than I could get on the open market.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 4425
Re: How much is a Fidelity 401K worth vs Voya
« Reply #10 on: October 08, 2021, 08:39:44 AM »
As it was explained to me, the company can either pay Voya's admin fees or pass that on to the employee, in our case the employee pays the fees. Then the ER for the funds are based on the total value of the all the 401ks in the company + the underlying ER of the funds themselves. In our case we are in the lowest tier (highest fees) because we are a small company and most of the people have small balances. In any case, my company could choose to pay all the fees aside from the underlying ER, but they do not.
In a case that went to the Supreme Court, "a fiduciary breached a duty of prudence by failing to properly monitor investments and remove imprudent ones."  A retirement plan ignoring high expense ratios when superior options are available can be sued for their breach of fiduciary duty.  The Supreme Court voted 9-0 on that one.  If you don't act now, consider suing after you leave.
https://www.scotusblog.com/case-files/cases/tibble-v-edison-international/

For $3k, could you get a lawyer specializing in retirement plans to write a letter?  It might save you $3k/year going forward.