Hello again.I'm back with another question regardingsetting up a retirement plan for my one-personS-corp.Since I'm leaning towards the profit-sharingor money-purchase plan, there is going tobe up to $30,000 invested each year. ApparentlyI have the option of putting it in a straightmutual-fund plan (some up-front load), orinto a plan that allows me to buy stocks.The catch? The stock variety will cost 1% ofassets up to the first $250,000 in the plan!If I go beyond that amount, it falls to a fixedfee.This seems high to me. Even in the first year,I will probably be trying to reach at least a20K investment, and will therefore have to putin at least an extra $200 to pay this fee. Thisis on top of the standard trading commissions that the brokerage house charges. As the balancein the account increases year over year, thefees sound outrageous! It could reach $500 in the second year itself, if things go well.It's being described as an "advisory" fee, but I plan to do my own research, so I'm not really going to be relying on their "advice".Is this a normal amount to pay? Do banks set up thissort of plan without me having to go through an intermediary and pay him/her the 1% or whatever?I don't mind paying trading commissions (well, Ido, but there are not many ways to totally eliminatethem), but these extra fees just sound like paddingto me.Comments? Advice? All cheerfully welcomed.Thanks,Beonice
You have to ask if you are really getting your money's worth for that "advisory" fee. I would explore the mutual fund option a little more before making a decision. Most funds will waive the front load for a corporate retirement plan account. IF you are dealing with an Advisor have him check out Oppenheimer Funds, AIM, American Funds or even Alliance Funds. If you are doing this solo, call Fidelity, Vanguard and T. Rowe Price to name just a few. Compare the expense ratios that are on some of these funds agains the "advisory" fee and trading costs you would have to pay under the other arrangement.Hope this helps.Bill
Beonice,I have a question for you; Why a profit-sharing-plan or a Money-purchase-plan? You can establish a SEP IRA (Simplified Employee Pension) and contribute 15% of your income upto $30,000. A SEP is very similar to a PSP or MPP accept you have NO administrative cost NO Reporting to file.With a PSP and MPP you have administrative cost and government reporting to file.Secondly, you should not have to pay a 1% fee if you are doing the work to pick stocks. If you are not going to pick the stocks then go with a mutual fund.Good Day Fool
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