That is on the high side, but 401ks have a lot of overhead. With a small plan, the burden falls on the employees.I work for a very small business. Last year, my employer switched from offering a Vanguard SEP IRA to a 401k managed by Capital Group (American Funds) at the advice of his financial advisor. My employer makes a generous profit sharing contribution (that I'm very thankful for!) and I'm making a max monthly contribution. I'm trying to approximate my 3-fund strategy (VTI, VXUS, BND) with the American Funds offered by Capital Group (there aren't really exact matches unfortunately, but I've picked stuff that seems roughly similarish).
I noticed that there is a 1% annual administrative fee charged to the account quarterly (plus a $25 fee per participant). As someone who has almost all of my personal investments (and Roth/Traditional IRA investments) in Vanguard ETFs, the 1% annual fee seems high to me and I know that it compounds to a lot of money over the long-haul.
Is that a pretty standard administrative fee for a small employer (just a couple of full-time employees)? Is there a cheaper option? I'm sure the boss would be more than happy to hear me out if there's a better option. I'm happy to do some legwork on finding that, but as someone who hasn't ever run my own business with retirement accounts, I don't really know where to start. Any advice would be much appreciated!
It would be worth asking if they'd be willing to switch the model to one where the company pays the fees directly instead of pulling it out of the accounts. The company can write it off as an expense and lower the profit sharing amount to compensate.
There's a post above that has some alternatives that will be lower cost.
Do you at least have access to the R6 shares class? That won't have the 12b-1 fees on the individual funds.
Statistics: Posted by exodusNH — Sat Mar 02, 2024 3:26 pm — Replies 7 — Views 245