Comments on: Monitor Your 401(k) Fund Fees

By: crazypumpkin

crazypumpkin — Wed, 13 Dec 2006 16:16:33 +0000

I’m getting ready to rollover my old retirement plan (state pension system) to a traditional IRA (my only option). I found this really helpful, but I’m still confused and trying to find answers. I’m in my mid 20’s. I want to start this now. How do I pick a place to roll my retirement savings over to?!

By: lionder

lionder — Wed, 22 Nov 2006 04:54:45 +0000

Most recent annual survey from the Profit Sharing 401k Council of America (PSCA) reflects growing participation in automated 401k deferrals. It shows that last year along six million participants were added in around 51 profit sharing plan. Also, the average deferrals were 5.4% for average compensated participants. Appears at 401K Tips

By: fivecentnickel.com

fivecentnickel.com — Fri, 17 Nov 2006 04:50:15 +0000

Weekly Roundup – 11/17/06

Here’s a quick look at some finance-related posts that caught my eye this week:

Flexo has a funny list of seven ways to save while maintaining your extravagant lifestyle.
FMF has some thoughts on juggling multiple job offers.
Jim reminds us to …

By: Jeremy

Jeremy — Thu, 16 Nov 2006 17:23:04 +0000

I think people are misunderstanding the point I was trying to make. In almost every case it is a bad idea to keep money in an old plan where you are no longer employed. What the original post and what I was referring to was when moving that old money, deciding whether or not to roll it into your NEW plan where you will continue to be contributing anyway or an IRA.

By: CK

CK — Thu, 16 Nov 2006 17:18:17 +0000

IRA all the way. Flexibility.

By: samerwriter

samerwriter — Thu, 16 Nov 2006 16:59:20 +0000

I agree with Jim — Dealing with a former employer’s 401k just makes things messy, and puts you at the mercy of their 401k administrator and their HR department. Both of which generally see you as a pain, since you’re not even an employee anymore.

The IRA generally gives you a better choice of funds, lower costs, and easier access to your funds. And if something happens to you, it is likely _significantly_ easier for whomever deals with your estate to deal with an IRA at Vanguard than a 401k.

By: Jeremy

Jeremy — Thu, 16 Nov 2006 15:24:20 +0000

But if you will be contributing money to your new 401k anyway, then there is no additional things to keep track of. It will be two separate accounts either way.

By: jim

jim — Thu, 16 Nov 2006 14:55:00 +0000

I don’t advocate rolling over just half only because it becomes a pain to keep track and simplicity is key whenever you’re talking about finances.

By: Jeremy

Jeremy — Thu, 16 Nov 2006 14:29:13 +0000

It definitely pays to examine your options when it comes to deciding whether or not to roll over your old retirement plan into your new employer’s plan or into an IRA. Unfortunately due to the tremendous number of plans out there and the investment options available it does take a little time for people to research the available options.

One thing to note is that many larger plans typically offer institutional variations of typical funds, which could mean lower expenses. Other smaller plans don’t, which could mean even higher expenses than buying the fund outright. For instance, our retirement plan offers about 20 different funds, all institutional, and many of the fees are in the 0.20%-0.40%, even after including all the underlying expenses. These same funds which are available to regular investors can have fees of 1.2-1.4%. Identical funds, but purchasing them via your 401k could provide a good savings.

Another good thing to consider when deciding what to do with your old retirement plan money is that you typically don’t have to roll all of it over. So, say your new plan has one really good fund option you’d like to capitalize on, you could just elect to move a portion over and then move the remainder to an IRA.

I did that with my latest rollover, because many of the funds were for the most part average, nothing I couldn’t find anywhere else, but one of the institutional mid-cap funds is just outstanding. One of the top rated by morningstar, low fees, and outstanding returns. I couldn’t find a similar fund in anywhere in the ETF or no-load universe. A few beat it slightly on expenses, but given the 1, 3, and 5 year returns on this fund was beating the other options by double digits, hard to turn that down. So, I just moved a portion of my old 401k into my new one simply for the mid-cap allocation, then rebalanced the rest of my portfolios to reflect the change.

I apologize for rambling on, but the bottom line is, as the original post stated, it is important to check on your fees when you are ready to roll money. Every plan is very unique, all have different fund options, and you should look at your options to ensure you can save the most money as possible.