Does anyone here have a 401K that sucks?

[Neverstop]

I am currently not eligible for my employers 401K so I do not know much about it. The only thing I now is that (maybe) the only investment available is for the Invesco equity and Income fund Class A. From what I was told by another member that fund is not too great, it has a 5.5% front load that may be or may not be waived. If it truly is that bad and they do not waive the front load fee I will probably only put in enough to get the Measly $750 match. 

I am curious what others out there have in regards to 401K options. Does anyone out there have it worse?

[xyzzy]

See if you can do an "in plan" distribution which lets you transfer the money out into an IRA. Also, see if your plan allows you to go self managed. Alternately, email your benefits group and complain. They may just be clueless. Tell them that you want a simple, low cost S&P 500 index fund option (like Vanguard).

[sleepyguy]

That is brutal.   I wonder who the guys are who 'negotiate' these corporate deals... clearly there was some 'briefcases' that traded hands.

I your company allows it.  I would keep the investment in a cash account then move it over to your personal managed account once or twice a year or something that won't cost you too many transaction fees.

I'm pretty grateful that my company offers a global balanced fund with a decent rate of 0.71% MER.  Not bad considering.

[Ursus Major]

That is brutal.   I wonder who the guys are who 'negotiate' these corporate deals... clearly there was some 'briefcases' that traded hands.

I suppose a lot of smaller companies are pushed to offer a 401k by their employees, but don't want to spend a dime on the plan. And some providers are obliging by offering a plan that doesn't cost the company anything, but milks the plan participants.

[nr]

Yes - I am a junior partner in a small local hospitality group.  There is no 401k so I can't contribute to one.

I've made it my resolution this year to start a side company so I can setup my own solo401k.  I just had my first month of $700 profit -  not much but it's a start!

[Lanthiriel]

And here I was going to complain about a 1.4% management fee. Front loaded anything makes my blood boil.

[COEE]

I only have one fund that has an expense ratio less than 0.1% - Vanguard Balanced Index Fund (VBAIX).  It's a pretty weak fund even by Vanguard standards.  Maybe it's worth letting my HR lady know that my options aren't that great.  Something tells me she doesn't have a clue.  Most of the funds in my 401k are ~0.35% which is bearable.  I'm paying ~1% on one to keep some diversification.  Ugh.  My last companies benefits were so much better.

[PhysicianOnFIRE]

I'm lucky to have good options with Vanguard Institutional Funds. What if I didn't?

The White Coat Investor has a guide for that.

[libertarian4321]

Almost all 401Ks suck to one degree or another.  Most suck a little, other suck to a major degree.

Even if you have good underlying funds (Vanguard, etc), the 401K "manager" (which basically does nothing but send out a quarterly statement) probably rips you off.

Usually, if you work for a small company, they will hire a "manager" that offers to run the 401k at little or no cost to your company (the small company usually says "great, go ahead!).  So what do they do?  They extract huge fees from the employees.

Unless you work for a big company that runs it's own program, or is able to negotiate low fees from the "manager" because of it's size, you are probably getting screwed to a degree.

They should allow us to move money from our 401Ks to a rollover IRA at anytime of our choosing, but since the 401K system is a government operation, that will probably never happen- we are held hostage to a poorly written law designed as much to make the "mangers" wealthy as to help us save for retirement.

[Rocket]

I'm lucky in that my last two companies offered institutional vanguard index funds.  Both companies employ 100's of thousands worldwide so they're pretty big.  Both offered pensions when I started too.  Neither offer pensions now though for new hires.

[Urchina]

For YEARS the best offering at DH's 401(k) were high-fee actively managed funds. It was awful. Finally enough employees complained and complained and complained that they added a BlackRock S&P 500 index fund. After he'd been maxing it out for 15 years. No match either, BTW. Ever.

It still sucks turkeys compared to the Vanguard funds I've got access to in my 403(b) and 457, but nothing like those actively managed funds.

Ugh. How much money did we lose to that shitty fund selection? I haven't the heart to calculate it.

[mistershankly]

Ugh. How much money did we lose to that shitty fund selection? I haven't the heart to calculate it.

I felt the same way with our company's 401k (also, no matching and nobody overseeing the choice of funds or fees) to the point where I stopped contributing for years (opting to invest in Vanguard, post tax).  This changed when I got on the HR committee and forced a change (through my nagging) to an almost-all Vanguard selection.  The company has 65 employees so it is possible to find a 401k fiduciary that will provide low cost options.  PM me if you want info on our 401k fiduciary in case you want to suggest a solution to a poor 401k program without having the leverage of Megacorp to control fees.