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No fees on my company's 401k?
Old 01-04-2005, 04:30 AM   #1
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No fees on my company's 401k?

After reading Marshac's recent post, I wanted to find out what kind of fee my own company (a giant corporation that's been around forever) was charging on our 401k account. When I called, them, the person said that there was no management fee on the account. Can that be right? It seems to good to be true. All of the mutual funds have low expense ratios, so is the company really subsidizing the plan and not passing the fees on to employees? I can't find any mention of fees in the employee handbook either...are they secretly taking a fee out of the mutual fund dividends?

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Re: No fees on my company's 401k?
Old 01-04-2005, 05:13 AM   #2
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Re: No fees on my company's 401k?

was no management fee on the account.
They just call it something else. Rest assured they are making money!
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Re: No fees on my company's 401k?
Old 01-04-2005, 07:50 AM   #3
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Re: No fees on my company's 401k?

I believe that there are companies that offer good/no fee/employee matching 401K benefits to employees and ofcourse, there are ones with expenses or high expenses just as with anything else in life.

Of my four 401Ks from previous jobs, 2 of which I still keep, 3 of the four are without any expenses except for the fund expenses. The remaining one charges $25.00 annual fee which the operating company deducts out of your account by 'selling' share(s) from the funds in your account (usually under one share since the charge is $6.25 quarterly.

Two of the 401Ks offerred 50% employee matching contributions. One of the two offers institutional funds at extremely low ER. For example SP500 index fund ER is .03%. They all offer stable value funds with no expense at 5% - 6% annual return. My stable value fund allocations for 2004 returned 5.92% - 6% for the year. These are the reasons why I still keep two 401Ks from previous employers.

By the way, I keep meticulous record of my fund shares and NAVs, verify 401K NAVs with external sources and recalculate the number of shares every quarter to make sure they add up to $6.25 fee deducted (for the one 401K with fee) so I'm certain that I'm not paying any hidden fees in my 401Ks.
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Re: No fees on my company's 401k?
Old 01-04-2005, 06:19 PM   #4
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Re: No fees on my company's 401k?

Yes, there are 401k's at both ends of the spectrum. The fees are a total of asset based fees and administrative charges, and your company selects from brokers that slant the fees either way. The fidelity website has a link to how to evaluate a 401k offering (for companies doing the offering) and notes that typically 91% of plan fees are asset based and 9% are administrative costs and goes on to discuss it.

So you get a better or worse 401k depending on if the company wants to foot some admin costs, or selects a plan where the participant foots more of the costs.
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