Business 401k - Vanguard

[jesa]

Not sure if this is the right place for this thread, so forgive me in advance. I own a company (4 employees) and we offer a Safe Harbor 401k. Currently, the account is with Edward Jones with Principal as the sponsor. I like Principal, however, between their high fees within the funds and EJ's fees, I know Vanguard would be a better option. Does anyone have experience in transferring this type of account to Vanguard? What are your experiences with Vanguard as a 401k provider?

I did inquire with Fidelity, where I have my taxable accounts. They wanted almost 10k a year to do this - which is 9k more a year than I spend with Principal. Still can't believe it.

 

[target2019]

My employer has over 500 "employee owners". We have Principal in combination with MS. The real owners are pushing MS as someone we should seek advice from, as they are paid advisers. I asked what do they do for the fee we pay? They are the advisers. Duh!

I think you're doing the right thing by seeking to lower fees for all. At the beginning of this year the expense ratios for some of our shares have fallen. For example, American Funds went from R4 to R6, a cheaper class of the same fund. However, our benefits person told me that we will be paying more to MS.

I think you are running into the same type of thing. There is some base level of risk and responsibility, and you pay something to someone for shouldering this.

 

[jesa]

@target - I totally agree. It is unbelievable the fees these "advisors" (salespeople) get. Ignorance is a terrible thing with finances - which I have recently come to realize.

The shouldering aspect is not troubling as with Safe Harbor, the math is computed for you on how much one must match and/or profit share. All Principal (401k sponsor) has ever done for their fee is give me that math and have me sign the document approving it.

I am a little worried about Vanguards fees as Fidelity's quote was absolutely ridiculous. Also a little concerned with Vanguards reputation with customer service. My initial test for them was to email them, which I did this morning about 401k options. Time will tell if and when they respond. Crossing my fingers this works out as the Vanguard funds are really intriguing to me.

 

[travelover]

DW worked for a rather large school district in metro Detroit. Someone woke up to their terrible 403(b) choices and asked Vanguard and Fidelity to participate. Vanguard did not want to play at all, though they did get Fidelity. Not sure what Fidelity charges, but my point is that even this fairly large organization struggled to get a low cost provider.

 

[target2019]

I am a little worried about Vanguards fees as Fidelity's quote was absolutely ridiculous. Also a little concerned with Vanguards reputation with customer service. My initial test for them was to email them, which I did this morning about 401k options. Time will tell if and when they respond. Crossing my fingers this works out as the Vanguard funds are really intriguing to me.

Have you seen this area of Vanguard site?
https://institutional.vanguard.com/VGApp/iip/site/institutional/clientsolutions/sdc

Not sure if it applies. But explains a few things about costs.

 

[LiveBelowMeans]

Our company uses t Rowe price. Very good low fee etc.

 

[Sunset]

I worked for a company, as employees we were all SO happy when the company switched to Vanguard. As employees we never knew about the fees, but we knew about the Expense Ratio on each fund and Vanguard was incredibly low cost.

As Self employed, I have a Vanguard self-401K , both IRA and ROTH versions, they charge $20 / fund in each one, so I have 1 fund in one, and 2 funds in the other. So $60/yr is the total charge plus the actual fund charges which are normal low Vanguard and exactly the same as I have in regular brokerage accounts.

 

[nun]

I worked for a company, as employees we were all SO happy when the company switched to Vanguard. As employees we never knew about the fees, but we knew about the Expense Ratio on each fund and Vanguard was incredibly low cost.

As Self employed, I have a Vanguard self-401K , both IRA and ROTH versions, they charge $20 / fund in each one, so I have 1 fund in one, and 2 funds in the other. So $60/yr is the total charge plus the actual fund charges which are normal low Vanguard and exactly the same as I have in regular brokerage accounts.

Yep, I opened a solo-401k with Vanguard this year. $20 /fund/year which is waived if you are a Flagship account holder, but they don't offer the Admiral class funds....still I just dump it all into the Balanced Index fund

 

[Earlyout01]

I had a small business and offered a safe harbor 401k and had about 15 participants. I rolled from an American Funds 401k to the Vanguard. It was a little work at first but then it was no big deal. I offered a self directed option so that participants could invest in pretty much anything that they wanted if they chose. Ascencus administered the 401k for Vanguard and they were okay to work with. My admin. fees were about $2500 per year with 15 participants and the more money that is in the plan the less the fees are and eventually they would get to $0. I payed for the fees as a business expense instead of divvying out to the participants as most would have come out of my part of the 401k because I had a much larger account value than the rest of the participants which is the reason for having the safe harbor. Also, I could deduct the fees as an expense through the business which helped with the corporate taxes. That's got to be better than Edward Jones. It was much better than The American Funds that I had originally set up with the help of a FA. I did the Vanguard setup my self. I hope that helps.

 

[iloveyoga]

I had a small business and offered a safe harbor 401k and had about 15 participants. I rolled from an American Funds 401k to the Vanguard. It was a little work at first but then it was no big deal. I offered a self directed option so that participants could invest in pretty much anything that they wanted if they chose. Ascencus administered the 401k for Vanguard and they were okay to work with. My admin. fees were about $2500 per year with 15 participants and the more money that is in the plan the less the fees are and eventually they would get to $0. I payed for the fees as a business expense instead of divvying out to the participants as most would have come out of my part of the 401k because I had a much larger account value than the rest of the participants which is the reason for having the safe harbor. Also, I could deduct the fees as an expense through the business which helped with the corporate taxes. That's got to be better than Edward Jones. It was much better than The American Funds that I had originally set up with the help of a FA. I did the Vanguard setup my self. I hope that helps.

Thanks for the post. We have a SIMPLE IRA with American Funds. I appreciate the small plan help, but the fees and front end loads are too high. I want to tackle this as a project this year.

 

[jesa]

Thanks for all your replies. Looks like I will land at Vanguard for my companies 401k. Although the annual fees are literally triple, in saving the 1% annual difference in fees versus Edward Jones, the difference is BAFFLING over the course of time. Really scary when you think about people that fall in the EJ trap.