56, Funded and looking to save costs.

[newt]

Good day!
I am a professional now working only part time. (just to fund my partnership retirement plan) Should have a very comfortable retirement in a few years. My problem is the 1.5 % my broker takes off the top every year. I need a plan that will take my partnership dividend and invest it without taking an arm and leg- one that I can trust pretty much forever.
I am in Utah if that is any help.
And no solicitation please. Just tell me what has worked for you.
Thank you.

 

[2017ish]

Edited to add: OP, my answer assumed US citizen/resident. Now I see your "Good Day," so that may be off?

I am confused about the reference to a "plan." Is the partnership dividend in a qualified plan? OTOH, you refer to the "broker" taking 1.5% (SHEESH!), which may indicate an after-tax account, or an IRA/rollover. The answer is going to be slightly more complex if in a qualified plan and if the $$ are to stay in such an environment.

IF in after-tax or IRA, however, it is an easy answer. Sounds like you have not been an active investor and would be content to let your money grow on its own. Putting your funds in Vanguard index funds would reduce your expenses to .0X% (Maybe a little bit higher if go international).

Recommend that you look at bogleheads wiki and, in particular at the portfolio section: Categoryortfolios - Bogleheads

If you need a qualified plan, you can still go with Vanguard and use the low cost index funds, but will have to pay for TPA services--still going to be tons cheaper than 1.5%.

 

[newt]

I am in a pretax qualified plan. I tried to get Vangard to take it, but they said because one of my partners already had an account with them, I would have to join his plan. We are all partners of different length, therefore have private amount in each of our accounts. I really don't want this partner to have access to how much I have. Any other suggestions?

 

[2017ish]

Well, if your ERISA guy/gal is ok with you setting up a separate account under the umbrella of the plan, you could do similar deal with just about any brokerage firm and either use their in-house index fund, or go with ETFs from vanguard or the like. In today's environment of 9.99 trades, you can load up on 6 figures of an ETF for essentially nothing (and, in many cases, for literally nothing). <you probably know that, e.g., vanguard ETFs share the same cheap cost structure as the open ended mutual funds>

Definitely need to get opinion of ERISA expert who can look at the details of your particular plan. That is the real hurdle, not the question of selecting investments (and location) that are much cheaper than those presently before you..

 

[newt]

I feel pretty stupid, which is not the normal for me (hopefully). What is an ERISA? How does one find and expert in ERISA?

 

[Big_Hitter]

it's an acronym for a major piece of legislation signed by Gerald Ford about 40 years ago

 

[pb4uski]

I am in a pretax qualified plan. I tried to get Vangard to take it, but they said because one of my partners already had an account with them, I would have to join his plan. We are all partners of different length, therefore have private amount in each of our accounts. I really don't want this partner to have access to how much I have. Any other suggestions?

Talk with Vanguard again. I think typically they would have a single plan for your employer and then separate accounts within that plan for your partner and for you. Only you could access and see what is in your account and only your partner could access and see what is in his account. I'm not sure if that is how it would work in your case, so you need to talk with Vanguard.

If you can't work something out with Vanguard then you could try Fidelity or Schwab or T.Rowe Price (in that order IMO).

 

[Big_Hitter]

sounds like the "deal" your firm made with the broker may make it problematic for you to move the account prior to your termination of employment - have you read a copy of the plan document?


you may want to get separate advice from an independent small plan benefits consultant in your area

 

[2017ish]

I feel pretty stupid, which is not the normal for me (hopefully). What is an ERISA? How does one find and expert in ERISA?

Sorry! Employee Retirement Income Security Act. Basically, shorthand way of referring to "Federal law and regulations governing retirement plans, both personal and employment based."

(And, yes, signed into law in 1974, although heavily modified since)

Agree with the other posters: 1. Get copy of the plan and have it reviewed by an expert (either lawyer, accountant, consultant) to see what your options are. The plan design is going to govern most things. 2. Talk again to Vanguard (hadn't thought of that).

 

[newt]

The official name is "profit sharing plan". I will talk to Vanguard again, thanks. And I will get back to you guys. Thank you for the help.

 

[Big_Hitter]

in that case you probably can't move your money until you have a distributable event

 

[swakyaby]

Newt, when I was given the choice to place pretax contributions in either the company's group retirement plan or a self-directed profit sharing plan, I was told I would need to locate a mutual fund or broker who would accept a profit sharing plan. I recall contacting Vanguard (this was 8 years ago), but they said they do not participate. I may have contacted Fidelity, but I ended up setting up a plan with T.RowePrice. Pretax contributions are sent directly from my employer to T.RowePrice in a mutual fund (or funds) of my choosing. The cost is whatever the mutual fund fees are to any of it's account holders. It's possible that once you set up such an account, you might be able to directly transfer the funds from your existing pretax qualified plan and avoid the 1.5% brokerage fee which is WAAAY too much in my opinion.

 

[newt]

Thank you for the above comments, I feel that I am now getting somewhere. Do any of the big guys offer discounts to their plans if you put in more that a million? Are you happy with T.RowePrice and how much do they cost? And finally, how do you establish that you can "trust" these guys with your trust?
I mean, it's not a huge nest egg compared to many out there, but it is mine....

 

[2017ish]

I would suspect that all of the institutions have tiers that would give you better perks at 1,000,000 (and 5,000,000) level of investments. At Vanguard, that is start of the Flagship tier, which gives you a few privileges. https://investor.vanguard.com/what-we-offer/personal-services/flagship-and-flagship-select-services Schwab and Fidelity also have a tier at that level.

As for the issue of trust, I've never established a discretionary account and have never relied on advice from any holder of my funds. If you direct your own investments, you shouldn't have reason to be concerned about this at any of the major institutions. Or, if you are concerned about bankruptcy of the institution, the individual accounts are required to be segregated from the firm's. To date, the problems with failure to segregate customer funds have been restricted to more entrepreneurial firms.

 

[swakyaby]

I know that Fidelity offers a $2,500 bonus if you transfer $1M of outside money into their accounts (it's on their website). Vanguard offers Flagship services at $1M which include the services of a CFP, discounts or free stock transactions, Turbotax program, and some other things, but again I'm not sure they participate in profit sharing plans. I'm not aware of any special perks from TRPrice. My loyalty and trust to TRPrice comes from an interesting event that occurred many years ago when another institution (Dreyfus) that had my rollover IRA held it from me despite numerous attempts to get it from their clutches, and TRowePrice got involved. The only cost I have is the expense of the individual mutual fund you choose which is easily available on their website under expense ratios. It's in general a no load mutual fund company, with a few exceptions.

I know what you mean by trust regarding your retirement account. Before my distasteful ordeal with Dreyfus, I believed that all big institutions treated all their customers with fairness and according to the rules set by the Securities and Exchange commission. Now, I limit what institutions I entrust my hard-earned savings to.

 

[newt]

Sounds like I have to do some checking around and then get back to you. Great information! It seems like Vangard is the most trusted. Anybody use TIA-Cref?

 

[pb4uski]

TIAA-Cref is well though to as well.

 

[newt]

Had a nice conversation with Vanguard yesterday. We are taking the retirement funds I have currently and putting them into an IRA with them. Then we are using my current profit sharing program to collect my yearly retirement with a once a year dump into Vanguard. Anyone see any problems with this (other than getting my current broker livid at me?)

 

[swakyaby]

Will your broker be taking 1.5% of any new contributions to your profit sharing plan? Are you able to directly contribute to Vanguard without going through your broker?

By being able to directly contribute to a profit sharing plan at a participating no load mutual fund, you can avoid unnecessary expenses.

 

[newt]

This is the skinny on it. Vanguard has a profit sharing program for our partnership- but all money going into it goes into one general fund and invested together. There is no way to tell how much my money earned as compared to my partners....crazy but true. And my partners have a sutile way of scooping the profits, so I do not want my money mixed with theirs.
Although this way is awkward, at least my money will only be charged for the year in which I have it in the Profit sharing plan, and then off to Vanguardland.
Question: how long does the money have to be in the profit sharing plan before it can be rolled over into my IRA?