Company 401k Plans

Top 10. Oct 6, 1998 4:56 PM

» JenL_3 - Mark, my husband's company just changed over to Vanguard for the

Mark, my husband's company just changed over to Vanguard for their 401K. I will check for info for you. In the meantime you might want to check out Timothy Younkin's Aug. 22 post in the Company 401K Plans thread. Tim has done a lot of research on the subject of 401K fees, and also included links. J.L.

-- posted by JenL_3

Top 11. Oct 6, 1998 5:52 PM

» Santa - Hire a "Fee Only" expert (maybe Kirk??) to come in and talk to y

Hire a "Fee Only" expert (maybe Kirk??) to come in and talk to your boss about the different options. Maybe have your Dean Witter rep make his case first and then have the "fee only" person do some research and present an alternative or two. He'll probably arrive at Vanguard or Fidelity and get your boss talking to the right people. Explain that the fee only person only has advice to sell and does not get a commission from the plans (if honest).

Anyway. Ask this question:

What loads are there? What expenses are there? Remember that many get around "no load" by having class b shares and charge the load into the annual expense and surrender fee. Ever notice how class b shares convert to class a after they have milked about 5 years at an extra 1% annual expense? These are some people's idea of "no load"! so watch out!

keep us posted....

Merry Christmas!

Santa Claws

-- posted by Santa

Top 12. Oct 6, 1998 8:17 PM

» Mark_J - Thank you all for the information! This is truly a wonderful fo

Thank you all for the information! This is truly a wonderful forum. I've been to many of the websites and seems like Vanguard is always mentioned as a low-cost leader. I talked with my boss tonight and gave him some info on Vanguard; the website address and their 401(k) phone number.

I did talk with some co-workers and many of us will be pushing Vanguard. It'll be like WWF tag-team! Hopefully, we'll get it. Thanks again! I'll keep ya posted!

Mark Johnsen, Investing and Finance Links

-- posted by Mark_J

Top 13. Oct 7, 1998 7:35 PM

» Mark_J - Crossing my fingers with hope... This evening, my boss printed

Crossing my fingers with hope... This evening, my boss printed out the article Jennifer pointed out to me above. He pleasantly joked to some of us that he was going thru "Mark's propaganda" but then assured us that he wants a good program... I'll keep ya posted!

Mark Johnsen, Investing and Finance Links

-- posted by Mark_J

Top 14. Oct 8, 1998 8:49 AM

» TimYounkin - Someone asked me about starting a 401(k) with Vanguard (Jen or M

Someone asked me about starting a 401(k) with Vanguard (Jen or Mark). The last I checked with Vanguard... They want a retirement account that has at least $1 million in total assets. Their fees are somewhere in the neighborhood of 0.5%-0.6% to the plan participant but will vary. I think Vanguard even itemizes the fees onto your quarterly statements so you see exactly to the dollar how much you are paying in fees. Something I am an advocate of.
I was just watching CNBC a moment ago @ 10/8/98 @ 11:30-CNBC just had a segment about 401(k) fees. Seems like there will be a continuous spotlight on this subject especially because the market is going down. The past 3 years hardly anybody took notice about fees because they always saw great gains. Now that losses are setting in, the losses will be even more dramatic if you are still paying high fees.
I'll be adding a part 3 and part 4 in the coming weeks to my web site. It will entitle calculating fees for the layman and avoiding the salesman's pitch. You might want to check my site for those updates.

-- posted by TimYounkin

Top 15. Oct 8, 1998 10:48 AM

» TimYounkin - The last I checked with Vanguard... They want a retirement accou

The last I checked with Vanguard... They want a retirement account that has at least $1 million in total assets. Their fees are somewhere in the neighborhood of 0.5%-0.6% to the plan participant but will vary. I think Vanguard even itemizes the fees onto your quarterly statements so you see exactly to the dollar how much you are paying in fees. Something I am an advocate of. I was just watching CNBC a moment ago @ 10/8/98 @ 11:30-CNBC just had a segment about 401(k) fees. Seems like there will be a continuous spotlight on this subject especially because the market is going down. The past 3 years hardly anybody took notice about fees because they always saw great gains. Now that losses are setting in, the losses will be even more dramatic if you are still paying high fees. I'll be adding a part 3 and part 4 in the coming weeks to my web site. It will entitle calculating fees for the layman and avoiding the salesman's pitch. You might want to check my site for those updates.
Maybe I'll include a Part 5 - The Basic ingredents for a 401(k) Plan. Just off the cuff - I would recommend your Boss to hire a fee only advisor who is well qualified. A good 401(k) plan doesn't need to offer a lot of funds, eight or so would do but i think 4 is the minimum allowed by law. Whatever the case, make sure they are no load mutual funds like Vanguard. Your employer should also accept "bids" from as many 401(k) plan providers. Management should choose wisely from these bids. Unfortunately, management forgets this very important role. Typically, management picks their 401(k) plan from word of mouth. Tisk , tisk... leaving the employees at a disadvantage. One fund that should be in all retirement plans is a fund that mimics the S&P 500, a money market fund, and some sort of bond fund. Although all funds should have low fees, the bond funds should definately have low fees because they historically won't produce the gains that stocks will produce over the long haul.

Although the trend is to pass the fees along to the employees how about asking your employer to pay the fees? This would be the best choice. Employees of Morningstar are lucky enough that their employer pays all the management fees. Of course, the employees still have to pay the fees associated with the mutual funds.

If your employer will offer an employee match be sure to take full advantage of it. It's like free money! My plan matches 5% as long as i put in 4% of my salary. Unfortunately, my plan also charges very high fees. I still put in 4%, however I don't put in my full 15% because i figure my other 11% would be better off in a taxable no load index fund. I wish I had a 401(k) plan with lower fees so I can take full advantage of this great tax shelter. I wish you better luck with your 401(k) plan.

-- posted by TimYounkin

Top 16. Oct 8, 1998 1:54 PM

» TimYounkin - Ooops, I almost forgot to comment on the remark "He thinks loads

Ooops, I almost forgot to comment on the remark "He thinks loads are good, because you get what you pay for." This is a myth. The fact is fees just reduce your return. They are strong arguements that the majority of managers can't even beat the S&P 500 index over the long haul. I am sure you may have heard of this.

You will find many links supporting the above statement at my links page. I have yet to come across any published material stating loads are good and I have yet to come across any articles supporting annuities are a proper vehicle as a retirement plan (at least that isn't promotional)LoL. Oh yes, there are the very best managers such as Buffett that beat the indexes but the chances are we won't be lucky enough to find them at the present time.

I do hope your boss and anyone else thinking loads are good does a bit of research.

-- posted by TimYounkin

Top 17. Oct 8, 1998 7:24 PM

» Mark_J - Yes, we found out that Vanguard isn't really for small companies

Yes, we found out that Vanguard isn't really for small companies. My boss still insists that funds with loads have lower fees; and funds without loads have higher fees. I know there is proof otherwise, but he just ain't buyin' it.

He is meeting with a broker/shark who is pushing B-shares of some fund (who knows which). Those are back-end loaded at 5%, declining for each year you hold the fund.

Another firm similar in size to ours uses Schwab. Has the full option on their no-fee-network of funds or even stocks. Another co-worker has worked for that company and has the name of the administrator. So we're still fightin'...

Most of the folks who work there really don't know much about investing, fees, etc. Seems like as a nation, we need some education in high schools...

Mark Johnsen, Investing and Finance Links

-- posted by Mark_J

Top 18. Oct 9, 1998 2:14 PM

» TimYounkin - Doesn't make sense to me- the remark , "My boss still insists th

Doesn't make sense to me- the remark , "My boss still insists that funds with loads have lower fees; and funds without loads have higher fees." Maybe you can explain a little more so we can help you. Check the prospectus comparing two mutual funds, one no load and one loaded fund (ie. S&P500 index fund-I know Vanguards is the lowest in fees around 0.17&-0.2% at thats it!). In addition to looking at the front or back in load be sure to consider the expense ratio of each fund. Next I would set up a spreadsheet and figure how $10,000 invested every year for 35 years would do in each fund gaining an average of 10% a year. If the loaded fund comes out ahead then please email a copy of the spreadsheet to examine.

I like the idea that high schools should be teaching financing. One of the first lessons learned should be to start saving early. Unfortunately, since nobody taught me anything about investing in my teens, I didn't learn till my late twenties. I'll be sure to teach my children the basics of investing very early.

-- posted by TimYounkin