Author Topic: Question on 401K quarterly fees??  (Read 1150 times)

Bootlip

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Question on 401K quarterly fees??
« on: March 03, 2017, 10:07:01 AM »
Principle is my 401K provider. When looking through my account on their website I noticed a Plan Fees tab. I clicked that and saw that I'm being charged a Plan Admin Svc charge quarterly. It's sub categorized under gain/loss. When I added up the four quarterly charges it came to .57% of my 401K balance. My question is does that sound like a lot? I understand there are all kinds of fees associated with these plans I just want to make sure it's not a ridiculous amount to be charged. I appreciate any help. Thanks

TheAnonOne

  • Handlebar Stache
  • *****
  • Posts: 1445
Re: Question on 401K quarterly fees??
« Reply #1 on: March 03, 2017, 10:13:27 AM »
If that's above and beyond the fund fees (and it sounds like it is) it certainly isn't "low"

If you have access to VTSAX and your in the .6% range total, it isn't off the charts, but it's not great.


Anything over 1% total is HIGH
Anything over 1.5% and your starting to wonder if the 401k is worth the tax savings.

Sent from my SM-G935T using Tapatalk


moof

  • Pencil Stache
  • ****
  • Posts: 503
  • Location: Beaver Town Orygun
Re: Question on 401K quarterly fees??
« Reply #2 on: March 03, 2017, 10:48:27 AM »
If it is really 0.57%, I would look into whether you plan allows for in-service withdrawals and rollover whatever vested balance you have into a Vanguard IRA periodically (annually for example).

jjandjab

  • Stubble
  • **
  • Posts: 135
Re: Question on 401K quarterly fees??
« Reply #3 on: March 03, 2017, 11:01:40 AM »
Yes, agree with above. This is in addition to your fund expense ratios (ER).

I just went through a crummy switch at my hospital. We initially previously had a provider that rolled their fees into the fund choices - so only folks that picked expensive funds were being charged more. I stuck to Vanguard funds and my total expenses were below 0.1%.

Now we switched and everyone pays a flat yearly fee of 0.31% in addition to fees, so most cost goes to about 0.4%. So basically the folks that knew to invest in low cost funds have to pay 4x previous, while folks that picked expensive funds pay around the same or slightly less. I argued this was dumb, but to no avail...

While not ideal, I would continue to invest. I tend to disagree  - I think that even over 1.5% in fees it makes senses to invest, at least depending on your tax situation. I pay 35% federal and state tax combined in a very high tax state, so by maxing my 401k and putting in 18,000, I save about 6,000 in taxes every year. But even if expenses were 1.5%, that's only costing me 240 a year. Of course, if you have lower taxes or other goals, then it might not make sense, but I'd argue for most people even a crummy plan is a good idea.

mateo_alou

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Question on 401K quarterly fees??
« Reply #4 on: March 03, 2017, 11:04:32 AM »
Thanks for asking this question, I have a similar about my 457 (b).  I noticed recently that my annual administrative fee (this plan is maintained by Nationwide) is .45%.  So, for every $100,000 I have in it, I'm paying $450 annually to Nationwide to maintain it.  The advantage of this plan is that it lets me invest in more funds of my choosing, some Vanguard funds among them.  So I can control fund expenses somewhat.  But the question for you expert investors is similar to Bootlip's--is that too much to pay???  Thanks!

Bootlip

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Question on 401K quarterly fees??
« Reply #5 on: March 03, 2017, 11:05:59 AM »
I think the wording in my post wasn't the greatest. The fees were .57% or my TOTAL 401K balance.

So to make sure I'm understanding this correct...

$127.15 (total) quarterly fees on a 401K with a balance of 22,494.33 (.57%)

22,494.33/1000=22.494    22.494x5.7(.57%)=128.21

SOOOO... That means I have to essentially add .57 to my ER?
In other words I take my 3 funds ER's of .18ea average it(.18), then add .57 to it for a total ER of .75?
Is that correct?
« Last Edit: March 03, 2017, 11:16:17 AM by Bootlip »

Bootlip

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Question on 401K quarterly fees??
« Reply #6 on: March 03, 2017, 12:01:18 PM »
Update: I had another guy at work pull up his 401K and check his fees. They were the exact same and he has a MUCH larger balance. So it turns out our 401K plan takes the total fees and splits them evenly across all members equally regardless of balance. So that answers my question. Thanks everyone for the input!

jjandjab

  • Stubble
  • **
  • Posts: 135
Re: Question on 401K quarterly fees??
« Reply #7 on: March 03, 2017, 12:13:26 PM »
I think the wording in my post wasn't the greatest. The fees were .57% or my TOTAL 401K balance.

So to make sure I'm understanding this correct...

$127.15 (total) quarterly fees on a 401K with a balance of 22,494.33 (.57%)

22,494.33/1000=22.494    22.494x5.7(.57%)=128.21

SOOOO... That means I have to essentially add .57 to my ER?
In other words I take my 3 funds ER's of .18ea average it(.18), then add .57 to it for a total ER of .75?
Is that correct?

I'm thinking you mean YEARLY expense of 0.57% deducted quarterly. You should be charged about $32 per quarter on a balance of 22.494. If you are being charged $127.15 per QUARTER, then your overall expenses are 2.28% per year, and that would be highway robbery...

But yes, you would add your yearly management fee to your fund expense fee (which is always yearly) to get your overall fee.

LAGuy

  • Bristles
  • ***
  • Posts: 317
  • Age: 44
  • Location: Los Angeles
Re: Question on 401K quarterly fees??
« Reply #8 on: March 03, 2017, 12:54:51 PM »
Yeah, that fee level is a pretty standard level for most 401k service providers. Often called a "management fee" on top of the fund fees. Unless you work for a company that handles their 401k plan in house (i.e. they pick their own funds from somebody like Fidelity - generally only really large organizations do this) there's no way of really getting around it. Just roll the money out as soon as you are able. It's still worth it given the taxes you're avoiding.

Proud Foot

  • Pencil Stache
  • ****
  • Posts: 952
Re: Question on 401K quarterly fees??
« Reply #9 on: March 03, 2017, 01:40:05 PM »
How long have you been a part of this 401k plan and have the quarterly fees been the same every quarter?  It sounds to me like your plan just charges a flat amount to each participant each quarter.  Its pretty common and is how the retirement plan at my previous employer worked.  At my current employer we are charged a quarterly fee based upon an annual rate of 0.21%.