Comments on: How Hidden 401k Fees Can Sink Your Nest Egg

By: Schleup

Schleup — Sat, 03 Oct 2009 12:48:21 +0000

Two more points. Each time a fund trades the trader on the exchange floor gets a commission. Most funds turn over their entire portfolio in one year, but small cap, international, or other riskier funds turn over their portfolio more quickly, thereby increasing the transaction costs. The costs are not disclosed in the perspectus, and I’ve often seen the costs exceed 2.5%. You can subscribe to personalfund.com. Since the fee is hefty, find a creative way to share the cost.

Second, mutual fund companies generate their revenue from fees that are typically based off assets under management. When the market dropped 40%, let’ say, and the assets also dropped accordingly, the fund company still faces the same fixed overhead as before. How do they pay their lease, retain their key managers, and so on when their revenue drops. They will not switch locations or fire highly paids. Instead, the cost will be passed down to the fund shareholders.

By: Steven Duval

Steven Duval — Sat, 13 Jun 2009 05:40:54 +0000

Just ditch your 401k plan, roll the funds out using 72t to avoid the 10% penalty and establish a 7702 Private Plan. In a 7702 Private Plan there is no market risk (interest is earned when the market goes up but the account remains whole if the market has a loss).
Future tax risk is considerable in a 401k, when Social Security is broke there is a going to be a huge target on all those untaxed funds sitting in 401k accounts, a 7702 Private Plan is 100% tax free and does not trigger punitive taxation on Social Security benefits like income from a 401k does.

By: Michael Lopata

Michael Lopata — Tue, 10 Feb 2009 16:01:56 +0000

Good article to create awareness on unnecessary fees you can avoid. Some things to consider regarding 401K plan options is whether there is a Roth 401K plan available. If not, are you eligible to contribute to a Roth IRA? To save money on fees, consider using indexed funds or exchange traded funds within the Roth IRA.

By: Chiko

Chiko — Sun, 08 Feb 2009 00:31:42 +0000

Great read.

By: JC Cameron

JC Cameron — Fri, 06 Feb 2009 19:24:05 +0000

Ooops, the BrightScope link is http://www.BrightScope.com

By: JC Cameron

JC Cameron — Fri, 06 Feb 2009 19:22:02 +0000

Another resource that you might want to consider is BrightScope (http://www.BrightScope.com) which provides unbiased scores and ratings of 401k plans. They give plan sponsors and participants tools to make their plans better and to see how their company compares to other companies in their industry.

JC Cameron
VendorCity – Your source for the best and most trusted vendors
http://www.VendorCity.com

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