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Old 06-13-2007, 03:06 PM   #21
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2. Front-end loads are waived.
...
The good things about it:
1. ?
Ooops, a good thing is that front-end loads are waived. That's not a bad thing.
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Old 06-13-2007, 04:18 PM   #22
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Olav, it's possible that the reason your company went with Merrill Lynch in the first place was because a person of influence in your corp had a connection with the Merrill Lynch guy. Aren't these networking connections what make the corporate world go round? Maybe they have stacked the deck with other firms that look even worse than ML, so that in the end, ML looks like the reasonable choice...
Damn! Now you've got me all paranoid!
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Old 06-13-2007, 04:34 PM   #23
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Yep, generally any new plan has to be significantly better than the current plan to make a switch. From the list you provided, I don't see that happening. I'm looking forward to reading about your meeting.
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Old 06-13-2007, 04:39 PM   #24
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Here's something to ask: Our 401k plan uses mutual funds not wrapped in annuities, so that we can keep track of our balances with Quicken of MSMoney because we can get a quote for the ticker symbols. We can thus figure out our own return on investment easily.

In contrast, my spouse's Hartford plan has annuity wrappers on all the funds. One cannot get ticker symbols and cannot get quotes. The Hartford quarterly reports are abysmal in order to hide all the fees. They show only how much money you have and not much when you contributed nor when you contributed. You can get this info through the web site with difficulty. But there is no easy way to track things with Quicken or MSMoney.
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Old 06-13-2007, 05:52 PM   #25
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Maybe they have stacked the deck with other firms that look even worse than ML, so that in the end, ML looks like the reasonable choice...
Ding Ding Ding!

Someone felt it was a good idea to go through "the process" just to make sure everyone feels like their complaints were heard and something was done about it.

Then stack the deck and call the incumbent back in for a diving catch save of the business.

Because those choices stink....
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Old 06-13-2007, 06:59 PM   #26
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I'll definitely voice those concerns tomorrow. But, so I sound like I did a bit of research, instead of just complaining, can you guys give me any recommendations? I'd like to bring those up and see why they were "shot down". I've got Fidelity on my list. Does Vanguard provide 401k services (at this asset level)?
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Old 06-13-2007, 07:09 PM   #27
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Saw this mentioned here or maybe elsewhere (do a search) web401k
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Old 06-13-2007, 07:18 PM   #28
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Olav,

Definitely look at this from an employees point of view - is this a good/great employee benefit? Or does it look to you, and likely other employees, that the company is trying to offer a 401(k) plan at the lowest cost possible to the employer, not the employee?

One interesting thing would be for you to calculate what the max fees are for your situation for you to contribute more than the company match. You can do this with Ed Chang's spreadsheet in his article Looking at Expenses of 401K Plans. For example, if the total expenses you'd be paying is 1.5% of your assets, and the you calculate that the max fees you could pay is 1.15%, then you should definitely point that out to management and other employees. You can also suggest to the others in charge of the 401(k) that they do the same. Of course, you've got to figure out what the fees are first.

I'm surprised more small companies still go with big financial services companies like ML, Prudential, etc. I guess they think that these companies will actually act in the companies' best interests. Yeah right. Has the company even looked at 401(k) administrators like JF Actuarial Services, Inc.. They're a small company in PA that provides access to mainly Vanguard funds.

Good luck.

- Alec
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Old 06-14-2007, 07:42 AM   #29
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Take a little taste of the political waters. Pick one of the higher ups you think you can talk to and in a 1:1 conversation in the hallway ask about the selection process and the inclusion of the company that you want to change from. See what the situation is.

If this is politically wired and already has a predetermined outcome, you probably dont want to throw yourself under the train...

<insert some platitude about changing what you can, accepting what you cant, and wisdom to know the difference>
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Old 06-14-2007, 08:01 PM   #30
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Well, this was a long and informative day. I learned way too much about fiduciary responsibility, form 5500 and revenue sharing models. I found out how they narrowed down the choices. Basically, they solicited bids and asked about revenue sharing and open fund access. Management wanted all net proceeds after the revenue covered expenses to be paid back to the plan, not surprisingly many said no. Fidelity was one of these. Others didn't have open access to many fund families. Prudential, as expected, gave that huge faceless corporation feeling. We actually liked Hartford, unfortunately their client website sucked, and that was very important to many of us. So, again, a no go. Merrill Lynch gave a fairly good performance. Diversified had a feeling of a "mid size" company, hungry for our business. They had a good looking website, and the price was MUCH less than ML. In the end, I fought hard for Diversified. Many of the people liked the idea of going with Merrill, mostly due to the name recognition. At double the price (that I realized would be passed on to us, the participants) I fought hard for Diversified. I think I won the fight, but we'll see when the ultimate decision is made. All in all, it was very informative, seeing the other side of this process. I did my best to illustrate how the "extra services" offered are generally unused and end up in lower returns overall. I think I got through to them. We'll see. Thanks everyone for your input! I'll let you know the final outcome.
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Old 06-14-2007, 08:11 PM   #31
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WTF? they changed something on this forum software and now it craps up all my whitespace! grrrrr
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Old 06-15-2007, 11:06 AM   #32
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Olav,

Definitely look at this from an employees point of view - is this a good/great employee benefit? Or does it look to you, and likely other employees, that the company is trying to offer a 401(k) plan at the lowest cost possible to the employer, not the employee?

Well, that probably isn't the case, did you see that it's a safe harbor plan? That isn't exactly the cheap route.
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Old 06-16-2007, 12:00 AM   #33
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We use Hartford, I don't much like it so have cut my contribution, we don't have a match. I can pay them on the website just logging in as me and choosing employer and it keeps the list of names and the amounts from last time I just change the ones who aren't salaried so it only take a minute to do them all. I will retire soon enough to not care about the plan much. I could re balance on line but too hard to tell what the funds are so I haven't bothered.
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Old 06-17-2007, 01:02 AM   #34
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Olav23, I found tonight Jeff Troutner's Asset Class newsletter. The Feb 2007 and March 2007 issues are specifically about fixing 401(k) plans and would be ideal items to print out and hand as hardcopy to your 401k committee members. While it would have been great to have them read these before your meeting, you might still be able to influence the situation by having them read as soon as possible.

Find them on the web at: TAMASSET.COM under the AssetClass tab. Or at http://www.halcyonwealth.com/pdf/ass...s/feb07ac2.pdf
and http://www.halcyonwealth.com/pdf/ass...s/mar07ac2.pdf


Please let me know what you think of these.
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Old 06-20-2007, 09:54 PM   #35
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I didn't want to start a new thread and my topic falls under 401k gripes. My employer has a crappy match, not much I can do about that. They also limit your contribution to 18% of pay -- obviously it can't go over the legal limit $15,500 I believe for 2007. However, if you make less and don't come close to the legal limits, why am I limited to just a percentage? I don't get why I can't designate a dollar amount so long as I stay below the legal limit. Maybe some others have an idea. I sent an email to our benefits division but no response and it has gone beyond the 48 hour promised response time -- imagine that.
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Old 06-20-2007, 10:31 PM   #36
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I've asked our TPA about this before, and the answer I got was this (paraphrased):

"The total contribution limits, including deferral and matching, used to be much lower. So in order to prevent people from going over this, many companies put percentage caps on your contributions just to avoid figuring out the numbers if someone got close. Several years ago, the caps were lifted and the rules changed such that there is NO limit to what percentage an employee contributes, provided that 1) they don't exceed either deferral or total contribution limits, 2) they do not violate 401(k) rules."

Item 2 is important, since it is the only practical reason for companies to still cap your contribution. That's the somewhat lesser known rule that limits highly compensated employees (HCEs) from contributing a higher percentage to the plan than the other employees at large. This is a legal test your plan must pass yearly, unless you are under something like a Safe Harbor plan.

Anyway, the point was the caps are generally there to make the life of your HR department easier. If they have an HCE cap of 20%, it's easier to just cap everyone at that amount. Or, even if there is no need to cap, many do it just because they always have and are too lazy to change it.

When we set up our plan, I pushed for no cap, and we agreed finally on an 80% limit. Even though I didn't need it that high, I wanted the other employees to have the flexibility of hitting the cap even if they had a lower compensation package.
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Old 06-20-2007, 10:34 PM   #37
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I should also mention that there is really no impact on most employers if you contribute more. I don't have our plan document handy, so I can't look up if there is legalese stipulating the max deferral % (there probably is, as you have to document all plan features). However, even if there is, when you go over, all that happens is your TPA will figure out by how much and then fill out a form for you to use with the IRS.

You will probably have to pay a fee to get the form prepared (our plan pushes the cost to the employee, not the employer), and then you'll get your overage refunded.
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Old 06-20-2007, 10:37 PM   #38
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Thanks NP. Hopefully I will get a favorable response from our HR. I think all companies should allow employees to put in the max fed limit if they can do it.
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Old 06-20-2007, 11:01 PM   #39
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Thanks NP. Hopefully I will get a favorable response from our HR. I think all companies should allow employees to put in the max fed limit if they can do it.
I agree completely. Luckily I had pretty much free reign to set many of the variables of our plan. I still don't know enough to make it "perfect", but after another year or two of dealing with this, I will be prepared to interview other companies to beat our current plan
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