Author Topic: Retirement Plans - Aggravating Additional Fees  (Read 4031 times)

BarkyardBQ

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Retirement Plans - Aggravating Additional Fees
« on: October 28, 2014, 11:17:04 AM »
My wife and I are reviewing all the options for our 457 plans and there are some additional fees that I just can't wrap my head around. I have about 15 options for my 457, whittled that down to Fidelity/Spartan, PlanMember Services, and The Legend Group. Spartan is obvious, PMS offers multiple Vanguard funds that align with our planned AA and The Legend Group also offers Vanguard funds, but I'm still trying to find out which ones. Wife's best option is Voya Financial which has a limited offering of Vanguard Funds but can align with our AA. Here's the issue.

Voya Financial is charging an additional .19% administrative expense for Vanguard funds!!! Voya also offers a TD Ameritrade Self Directed Account with a $50 annual fee.

Spartan funds while trying to match Vanguard funds don't quite hit the same expense ratio.

PlanMember Services charges .35% per year charged quarterly for the Self Directed Plan.

Legend Group doesn't seem to have a custodial fee, but I still have to find out which Vanguard options they have.


We want to max out these plans (18000 each for 2015). Should we keep looking and try to find other funds or plan sponsors or am I getting annoyed for nothing?

seattlecyclone

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Re: Retirement Plans - Aggravating Additional Fees
« Reply #1 on: October 28, 2014, 11:32:47 AM »
The difference in expense ratios between Fidelity Spartan funds and the Vanguard equivalent is not very high at all, so I think Fidelity is likely going to be the clear winner for your plan.

Your wife's plan's 0.19% surcharge for Vanguard is annoying, but you're probably better off paying that and taking the tax deferral than you are investing the same amount of money in a taxable account. Does the TD Ameritrade self-directed option also have trading commissions? If so, that probably makes the fees higher overall than the Voya Financial option.

I would say max out the Fidelity option through your plan first, then if you still have room in the budget go ahead and buy Vanguard funds in your wife's Voya Financial plan.

BarkyardBQ

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Re: Retirement Plans - Aggravating Additional Fees
« Reply #2 on: October 28, 2014, 11:53:35 AM »
I will have to check about trading fees for the TD-SDBA. We will be able to max out each 457, so her plan would be Vanguard funds. Compared with the other fund options in the list the additional .19% is still cheaper.

GGNoob

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Re: Retirement Plans - Aggravating Additional Fees
« Reply #3 on: October 28, 2014, 12:11:13 PM »
My 457 and 401k are through Colorado PERA which uses Voya Financial. The account funds I have access to are PERAdvantage funds, which are basically just multiple funds in one from different financial advisors (example). They charge 0.14% as a plan administration fee on top of those funds. The cheapest funds are the Target Retirement funds with 0.12% fund fee with 0.14% plan fee. But I too have the same TD-SDBA option and I chose to go with that as I can invest in their commission free ETF's. So it's $50 a year, plus 0.06% plan admin fee on top of my 0.10% average Vanguard ETF fee. So $50 plus 0.16% isn't horrible. But they also charge a $1 per month fee per account...as in $1 per month for the 457 and $1 per month for the 401k. So it's really $62 plus 0.16% for each account. I may have more fees than you with the $1 per month and the 0.06% fee for the SDBA options. But I figure as long as I'm maxing out my contributions, it won't take long for that $62 to be less impact than a slightly higher asset based fee.

If Fidelity is the cheapest, go with that. Otherwise Voya really isn't all that bad in my opinion. They also have very good rebalancing options and easy to use account if you went with their normal Vanguard funds.

Some math with my scenario...

SDBA is 0.06% plan fee plus 0.10% ETF average fee for a total of 0.16% of assets.
On top of asset based fee, $1 per month and $50 per year for a total of $62 per year.

1st year 62/18000 = 0.34% + 0.16% = .50%
2nd year 62/36000 = 0.17% + 0.16% = .33%
3rd year 62/54000 = 0.11% + 0.16% = .27%
4th year 62/72000 = 0.09% + 0.16% = .25%

So by the 4th year, assuming no growth of investments, I have a lower overall fee than I would with the Target Retirement Funds. Plus I get to invest in the same Vanguard funds needed to match my asset allocation.

BarkyardBQ

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Re: Retirement Plans - Aggravating Additional Fees
« Reply #4 on: October 28, 2014, 12:20:05 PM »
Your SDBA is still managed through Voya or is it different once you open it? I see that the SDBA option gives us access to 13000 funds, which should help us actually get the AA we want vs the VINIX, VMISX, VSISX, VBTIX the basic option provides now.

GGNoob

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Re: Retirement Plans - Aggravating Additional Fees
« Reply #5 on: October 28, 2014, 12:21:28 PM »
I will have to check about trading fees for the TD-SDBA. We will be able to max out each 457, so her plan would be Vanguard funds. Compared with the other fund options in the list the additional .19% is still cheaper.

I mentioned this in my previous post, but you can invest in the commission free ETF's at TD Ameritrade. So you shouldn't have to incur any additional fees (at TD) with the SDBA option.

Your SDBA is still managed through Voya or is it different once you open it? I see that the SDBA option gives us access to 13000 funds, which should help us actually get the AA we want vs the VINIX, VMISX, VSISX, VBTIX the basic option provides now.

It is through TD Ameritrade, just like yours would be.