Comments on: Know Your 401k Retirement Plan Fees http://amateurassetallocator.com/2008/08/04/know-your-401k-retirement-plan-fees/ Amateur Asset Allocator Fri, 10 Feb 2012 18:16:33 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Carol Skinner http://amateurassetallocator.com/2008/08/04/know-your-401k-retirement-plan-fees/comment-page-1/#comment-3253 Carol Skinner Wed, 04 Feb 2009 17:19:25 +0000 http://amateurassetallocator.com/?p=253#comment-3253 While I applaud your efforts to better educate plan participants, I encourage a better understanding of the 5500. In your article, "Know your 401k fees" you mistaked how a participant can determine how much of their account is "used to pay the bills" and thereby excludes from the investment return calculation. The line item on the 5500 filing entitled, Net Adm Expenses includes MORE than just plan fees. The 5500 form includes benefit payments as an "expense" to the plan, so the net Adm Expense amount INCLUDES the amount paid out to participants. Your overarching logic is correct in that a participant can determine what is being 'lost' to internal fees, but the calculation must use only the total of Adm and Investment fees as a divisor into the total plan assets. Additionally, I suggest half-weighting the contributions and benefit payments against the beginning balance, instead of using the ending plan balance. Traditionally, contributions and payments are made throughout the year, not as of the beginning of the year. While I applaud your efforts to better educate plan participants, I encourage a better understanding of the 5500. In your article, “Know your 401k fees” you mistaked how a participant can determine how much of their account is “used to pay the bills” and thereby excludes from the investment return calculation. The line item on the 5500 filing entitled, Net Adm Expenses includes MORE than just plan fees. The 5500 form includes benefit payments as an “expense” to the plan, so the net Adm Expense amount INCLUDES the amount paid out to participants. Your overarching logic is correct in that a participant can determine what is being ‘lost’ to internal fees, but the calculation must use only the total of Adm and Investment fees as a divisor into the total plan assets. Additionally, I suggest half-weighting the contributions and benefit payments against the beginning balance, instead of using the ending plan balance. Traditionally, contributions and payments are made throughout the year, not as of the beginning of the year.

]]> By: Curt http://amateurassetallocator.com/2008/08/04/know-your-401k-retirement-plan-fees/comment-page-1/#comment-1570 Curt Mon, 04 Aug 2008 20:51:52 +0000 http://amateurassetallocator.com/?p=253#comment-1570 These fees really suck. I don't have time to figure these out. I'm better off not putting any money into my 401k in the first place. I don't believe the 'free money' argument pitched by most financial advisers (most of them also believed in the financial industry). I think people would be better off paying off their debts and creating a savings account. Saving for retirement before getting out of debt is a foolish idea - even with a company match - that will likely be gone by the time you can take the money out anyway. The only good that the govenment created 401k savings plan has brought is that it provided the stock market with a base that cannot be quickly sold. That base is not found in foreign markets, which is why they can dive 50-70% very quickly . These fees really suck. I don’t have time to figure these out. I’m better off not putting any money into my 401k in the first place. I don’t believe the ‘free money’ argument pitched by most financial advisers (most of them also believed in the financial industry).

I think people would be better off paying off their debts and creating a savings account. Saving for retirement before getting out of debt is a foolish idea – even with a company match – that will likely be gone by the time you can take the money out anyway.

The only good that the govenment created 401k savings plan has brought is that it provided the stock market with a base that cannot be quickly sold. That base is not found in foreign markets, which is why they can dive 50-70% very quickly .

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