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Should I Stay with this Self Directed Account?
Old 07-01-2013, 11:08 PM   #1
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Should I Stay with this Self Directed Account?

My employer offers a self directed account within my 401k. The SDA is like a brokerage account. A maximum of 1/2 of the total value of my 401k account can be placed in the SDA. I originally enrolled in the SDA because my 401k did not offer a bond fund. I was also able to fill some domestic and international bond fund allocation of my asset alllocation through the SDA. I currently have about 30 percent of my 401k money in the SDA. I haven't added more money into the SDA for a couple of years,

Well, the employer has gone to a third party administrator for maintaining the SDA. Aon/Hewitt is the third party administrator.

I will list some of the new fees below. These fees are in addition to whatever fees are charged by the mutual funds that I purchase within the SDA. I would like to know whether I should keep my money in this SDA account or switch it over the the funds offered by my 401k. THe funds in the 401k have pretty competitive expense ratios.

Thanks for the feedback.

SDA fees:

MUTUAL FUNDS - $500 Investment Minimum
purchase $19.95
Exchange Between Funds within the SDA $10.00
Broker Assisted Fee Additional $25.00
Outgoing Transfer Fee $75
Duplicate Statement $5
quarterly maintenance fee $20

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Old 07-01-2013, 11:26 PM   #2
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Sounds like my 401(k) plan. Except we use Prudential. They also charge $19.95 per trade.

Depends on what funds your plan offer. Our 401(k) plan offer about 15 mutual funds so I have half my money in the SDA...investment not going well....too much money in AAPL and QCOM. All my big position are losers while my small positions are up 20%. D'OH!!!!

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Old 07-02-2013, 05:19 AM   #3
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It seems to me (based on a three-out-of-six comparison) that the retirement plans that offer a SDA option also happen to be the plans with the best regular (non-SDA) choices. Where we want/need the SDA it isn't offered; where we've got we don't need it.
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Old 07-02-2013, 07:56 AM   #4
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Yes bUU- that is a good point, it seems like I can get all of my asset allocation sections covered by the funds offered within the 401k, so the SDA is less attractive. I would not use the SDA to invest in one company, I am always trying to diversify.
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Old 07-02-2013, 11:32 AM   #5
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DW is with Aon Hewitt, with an SDA. We pay the $20/quarter. However, there is a pretty substantial list of no-fee mutual funds that we can purchase. If that's not available then you need to be slightly motivated and be able to buy mutual funds in large chunks to avoid taking a big percentage hit on expenses. A $20 purchase fee on a $20k purchase is only a 0.1% one-time cost on those shares. Spread over a few years of holding it's a small cost. Same thing with the quarterly fee, except it looks better with a $200k total SDA account balance. For a $2k total SDA account the fees wouldn't be worth putting up with.
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