Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I guess my employer's plan is pretty good. I thought it was just average for the sector or slightly better than average overall.

Well, I was going to give you a link where Brightscope rates 401(k) plans, so you could check the ratings for yourself, but their website doesn't seem to be working tonight. If it happens to come back up, here's the link:

I can invest in VIIIX (S&P500 index) with a 0.02% exp ratio or a managed growth fund with 0.38% expense ratio.
I think my most expensive fund I own in it is a managed low-price stock fund that has a 0.45% expense ratio.
If I look at going with a similar fund outside of my 401k like FLPSX it'd be 0.67%

That does sound like a pretty good plan. The large company that I retired from recently has a better than average rating - 86 or 87, I think, and the index fund expense ratios are in the 0.01% - 0.06% range, target date funds with a 0.08% ratio, and managed funds between 0.22% and 1.06% - which are generally lower than similar funds outside of the plan. Additionally, there are administration fees that get taken out up to once a quarter that are generally in the 0.002% - 0.003% range. (Last year, those fees were only taken out 3 out of the 4 quarters, though.) I still have money invested in my 401(k) there.

On the other hand, the 401(k) at my current consulting gig (handled through a fairly small temp/contracting agency) has index funds with expense ratios of 0.04% - 0.16% (so, 2.5 - 4 times as high), target date funds from 0.56% to 0.74% (so, 7 - 9.25 times as high), with managed funds from the 0.2% - 1.0% range (so, about the same). However, the administration fee, which will be charged every quarter, is in the 0.02% range per quarter (0.08% per year) - which is 8 - 13 times as much as my old employer's plan, if you consider my prior plan only charged me for 3 out of 4 quarters last year. Compared to Joel's example, these expenses are lower, so it's still not a bad plan - but they are significantly higher than my prior employer's plan.

That said, because I'm not planning on being in this gig for long, I decided that the benefits of being able to put more money into tax deferred/tax free accounts was worth the extra expense ratio. However, as soon as I can after my gig is over, I plan on rolling the money to my Vanguard IRA to get out of paying those expenses. (I can't roll money into my prior employer's 401(k), because I no longer work there.)

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.