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How should an individual evaluate a potential employer’s 401K Plan?

Here's a tool that compares 401(k) plans by company https://www.brightscope.com/

6. What about FEES associated with employer’s 401K plan? Usually, the employer will cover fees associated with administering its 401K plan. Each of the funds included in a 401K plan impose fees, (e.g., ‘expense ratio’) which you need to consider before investing in one of them. In my experience Employees were usually charged $50 per year for access to a ‘stock window’. In other words, it cost me $50 annually for the option to invest in S&P Index Fund or individual stocks rather than being limited to funds offered within the employer’s 401K plan. In my case, that $50 was usually well-spent.

That's highly dependent on the plan. In my 401(k) plan, one of my offerings is the Vanguard 500 Index, with a 0.01% expense ratio. If I were to buy it as an Admiral mutual fund (VFIAX), the expense ratio would be 0.04% If I were to buy it as an ETF (VOO) the expense ratio is 0.03% So my 401(k) gives me a better deal than you would get in your brokerage window. The difference in expense ratio isn't huge, but if that's the only thing I wanted to buy in my brokerage window, I certainly wouldn't want to pay $50 a year to pay a higher expense ratio. Not that it really mattered, because I'm not offered a brokerage window - and I haven't seen a lot of plans that do offer one. YMMV

AJ
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