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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Re: Evaluating the fees associated with 401K opt Date: 10/8/1998 10:44 AM
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Rufford asks:

I'm not sure what these fees actually pay for, but I just got a call from the management company that was researching what their own fees mean. They say it is a daily expense.

So one of the more expensive funds is .65-.75%. Is it possible that they are taking out $0.75 for every hundred dollars in there _EVERY DAY_?! So the fund needs to gain at least .75% a day to stay even. I'm not quite sure how to translate this into anual gain necessary to pay for the expense of the account. Could someone let tell me how to work that out?


The 65 to 75 basis points is an annual charge, not daily. Your plan may charge a certain amount each day for accounting purposes, but over the course of a year those costs only amount to (at most) 3/4 of 1% per year.

If you want some background on fees, see the DOL site I referenced earlier at:

http://www.dol.gov/dol/pwba/public/pubs/401kfe~1.htm

and check out that paper as well as the DOL study it is linked to.

Regards....Pixy
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