Search found 736 matches

by fcirullo
Sun Apr 01, 2012 1:07 pm
Forum: Investing - Theory, News & General
Topic: 401(k) - Why do employers still trust bad advice?
Replies: 47
Views: 4711

Re: 401(k) - Why do employers still trust bad advice?

mhc wrote:Why should I expect them to align with my particular investing style?
Does your plan offer the particular funds that you would prefer to invest in? If not, have you asked the named fiduciary to include them in the menu? If so, what was his or her response?

By the way, if an organization sets up a 401(k) or 403(b) plan, it's because they see the benefits to the organization of having a plan. But many employers don't see the benefits of having a simple, low cost, plan that has a menu of index funds. Why?

Edited on 04/01/2012 to fix a typographical error.
by fcirullo
Sun Apr 01, 2012 10:32 am
Forum: Investing - Theory, News & General
Topic: 401(k) - Why do employers still trust bad advice?
Replies: 47
Views: 4711

401(k) - Why do employers still trust bad advice?

What's your opinion on why most employers still trust the advice of the usual suspects (people who recommend average to high cost 401(k) or 403(b) plans)?

The deadline for disclosing 401(k) and 403(b) plan costs is coming up soon. Yet, I have noticed that only a few employers (plan sponsors) have discovered this Web site and asked questions about how to improve their plan.

The good news is that things really can change one employer at a time...one employer after another discovering how to set up a low cost plan can result in a snowball effect.

The bad news is it's likely that most plans will still cost more than they should even after the deadlne come July!
by fcirullo
Fri Mar 23, 2012 10:40 am
Forum: Investing - Theory, News & General
Topic: convince my boss to do 401(k)
Replies: 6
Views: 944

Re: convince my boss to do 401(k)

joe8d wrote:BTW:Congrats Frank ( fcirullo ), I see you were quoted in the current issue of "Smart Money" regarding 401k plans . :thumbsup
Thank you! For those who did not see the article, "The Big Business of 401(k) Plans," written by Ian Salisbury, here is the link: http://www.smartmoney.com/retirement/pl ... 829331243/

pkcrafter wrote:Thanks for keeping us informed, Frank. Your contributions in this area have been very enlightening.
You are welcome! And thank you for all of your contributions.
by fcirullo
Thu Mar 22, 2012 5:38 pm
Forum: Investing - Theory, News & General
Topic: Successful 401k Switch
Replies: 3
Views: 765

Re: Successful 401k Switch

Hi DK,

Congratulations on your success, and thank you for the information! It will be helpful to others who want to switch plans.

Best wishes,

Frank
by fcirullo
Thu Mar 22, 2012 3:43 pm
Forum: Investing - Theory, News & General
Topic: Successful 401k Switch
Replies: 3
Views: 765

Re: Successful 401k Switch

uvadk wrote:Hope this story gives hope to those who may be thinking about doing the same thing. Please let me know if you have any questions about the process we used.
It would be helpful if you will share with us which firm your company uses for recordkeeping and administration? How much do they charge per eligible employee per year?
by fcirullo
Thu Mar 22, 2012 12:00 pm
Forum: Investing - Theory, News & General
Topic: convince my boss to do 401(k)
Replies: 6
Views: 944

Re: convince my boss to do 401(k)

dikindu wrote:I work for a small company around 15 employees That doesn't have a retirement plan of any sort
Your question is different because you are asking about setting up a new plan, not improving an existing one.

Ask your employer why he or she has not set up a plan. Next, let us know what he or she says. Okay?

Regarding your other question about learning more about 401(k) plans, you can learn everything that you need to know by reading this wiki article: http://www.bogleheads.org/wiki/Setting_up_a_401k_plan
by fcirullo
Sun Mar 18, 2012 11:38 am
Forum: Investing - Theory, News & General
Topic: 401(k) - Article on plan costs in Smartmoney Magazine
Replies: 14
Views: 1697

Re: 401(k) - Article on plan costs in Smartmoney Magazine

Which types of plans are covered by this? 401k, 401a, 403b, 457b, others? The final Rule applies to workers in ALL 401(k)-Type Retirement Plans, which are listed at an IRS Web site at http://www.irs.gov/retirement/sponsor/article/0,,id=155347,00.html You can get more information at http://www.dol.gov/ebsa/newsroom/fsparticipantfeerule.html, which talks about EBSA being responsible for administering and enforcing the fiduciary, reporting, and disclosure provisions of Title I of ERISA. It says that "The agency oversees approximately 708,000 private pension plans, including 483,000 participant-directed individual account plans such as 401(k)-type plans." - A "participant-directed plan" is a plan that provides for the alloc...
by fcirullo
Sun Mar 18, 2012 9:12 am
Forum: Investing - Theory, News & General
Topic: 401(k) - Article on plan costs in Smartmoney Magazine
Replies: 14
Views: 1697

Re: 401(k) - Article on plan costs in Smartmoney Magazine

thanks for the link, I am going to try to make some waves about the fees (which are getting quite high in actual dollars as my portfolio is nor serious money). Remember to point out the following information to your employer: "If a service provider fails to provide the required information, the contract or arrangement between the plan and the service provider is prohibited by ERISA, and the plan fiduciary will have engaged in a prohibited transaction." The above quote was taken from The Department of Labor's Website at: http://www.dol.gov/ebsa/regs/feedisclosurefailurenotice.html The plan's "fiduciary" is the employer and anyone else who makes certain kinds of decisions for a 401(k) or 403(b) plan. Your employer can get...
by fcirullo
Sat Mar 17, 2012 2:06 pm
Forum: Investing - Theory, News & General
Topic: 401(k) - Article on plan costs in Smartmoney Magazine
Replies: 14
Views: 1697

401(k) - Article on plan costs in Smartmoney Magazine

Article by Ian Salisbury: The Big Business of 401(k) Plans was published on March 15, 2012, at http://www.smartmoney.com/retirement/pl ... 829331243/

The article ends with this. "Bottom line: The tussle over fees has only just begun."

More information on the new rule on cost disclosure is at: http://www.dol.gov/ebsa/regs/feedisclos ... otice.html

What's your opinion? Will the tussle over fees continue even after the new rule on cost disclosure takes effect on July 1, 2012?
by fcirullo
Wed Feb 29, 2012 11:14 am
Forum: Personal Finance (Not Investing)
Topic: Fiduciary duty and Roth 401(k)
Replies: 29
Views: 2585

Re: Fiduciary duty and Roth 401(k)

Can fiduciaries be called to task for putting a Roth option in their 401(k)? For not having a Roth option? Hi livesoft. Great questions, and a very good discussion as well! I have included this thread in the wiki article under "Forum discussions" at Setting up a 401(k) plan My opinion is that Congress wants to encourage people to save money, so I think that it does not matter to them which type of plan(s) you set up. Therefore, here is how I would answer your questions: Q: Can fiduciaries be called to task for putting a Roth option in their 401(k)? A: No, no one will call you to task. Q: For not having a Roth option? A: No! The type of plan(s) you set up will depend on how much time you want to put into setting up, managing, and ...
by fcirullo
Thu Feb 16, 2012 8:01 am
Forum: Personal Investments
Topic: I choose funds for company 401k
Replies: 24
Views: 1442

Re: I choose funds for company 401k

grok87 wrote:Do NOT offer actively managed funds. They are a huge hassle from a fiduciary standpoint. You have to constantly monitor them and replace them if they underperform (as many of them will). Their higher fees make it more likely that you will get sued.
The best thing one can do as a fiduciary to minimize fiduciary liability is to offer an all index line up. Take the federal TSP plan as your model- it is all index.
Well said! Do what grok87 suggested and you will save time, too.
by fcirullo
Sun Feb 12, 2012 5:16 pm
Forum: Investing - Theory, News & General
Topic: 401(k): Have you referred someone to one of these sites?
Replies: 3
Views: 740

Re: 401(k): Have you referred someone to one of these sites?

For those who have not referred someone to the three 401(k) plan sites mentioned, have you have ever told anyone about Bogleheads.org in general?

Word of mouth advertising is powerful, so I'm just wondering how you feel about referring people to a Web site that has information on investing.
by fcirullo
Sat Feb 11, 2012 2:24 pm
Forum: Investing - Theory, News & General
Topic: 401(k): Have you referred someone to one of these sites?
Replies: 3
Views: 740

401(k): Have you referred someone to one of these sites?

If you have shared one of the following sites with someone, I hope that they thanked you. If they are using the information, it has improved their plan. However, some people will not bother to thank you. I hope that you will continue to refer more people to the following sites anyway. Think the people that you shared these sites with are not listening? Just have a look at how many times these three sites have been viewed. 1 - Viewed 4,345 times: Setting up a 401(k) plan at http://www.bogleheads.org/wiki/Setting_up_a_401k_plan (Copy and paste this link into your browser) 2 - Viewed 6,040 times: How to Campaign for a Better 401(k) Plan at http://www.bogleheads.org/wiki/How_to_Campaign_for_a_Better_401(k)_Plan 3 - Viewed 44,253 times: Setting ...
by fcirullo
Sat Feb 11, 2012 10:48 am
Forum: Personal Investments
Topic: Vanguard/Ascensus vs. Employee Fiduciary?
Replies: 7
Views: 3151

Re: Vanguard/Ascensus vs. Employee Fiduciary?

Bogleheads, there is also an ETF platform for 401k's that our adviser has found. Thank you for posting this information. We can include them in a Bogleheads.org thread that has a list of low cost TPAs, which is at http://www.bogleheads.org/forum/viewtopic.php?t=81170 1 - Would you mind asking this Third Party Administrator (TPA) to show us how much they charge per eligible employee for recordkeeping and administration? 2 - How much would it cost for thirty eligible employees, complete? 3 - Is the plan sponsor (employer) required to hire a plan consultant or investment adviser? If so, how much will it cost? 4 - Who is the contact person and what is their phone number? P.S. Ask them to update their site on 403(b) plans, which says this: &quo...
by fcirullo
Fri Feb 10, 2012 11:19 am
Forum: Personal Investments
Topic: how do employers pick funds for 401k
Replies: 23
Views: 4599

Re: how do employers pick funds for 401k

My biggest takeaway from the process isn't that the 401k is the problem, it's that employee education is lacking in a BAD way. The biggest win is that we are going to get some seminars on why people should save and how to actually use a 401k. Congratulations on your success--it's a blueprint that others can use. Regarding education, the trick is to get the employees' attention. Caution: Educating employees on how "great" the plan is probably won't get the attention of most employees. Instead, as a first step, you may want to say something like this: "In a moment we are going to talk about the plan and its investments. But before we get into that, do I have your permission to communicate something to you?" They will say ...
by fcirullo
Fri Feb 10, 2012 10:24 am
Forum: Personal Investments
Topic: how do employers pick funds for 401k
Replies: 23
Views: 4599

Re: how do employers pick funds for 401k

KSActuary wrote:The advisor who tries to sell a particular platform is selling that platform because it benefits him, not the employer.
Well said!

Employers and employees need to learn what a low cost plan looks like. Once shown the picture of a truly low cost 401(k) or 403(b) plan that has a core mix of index funds, they can duplicate it and not worry that they don't have the skills to uncover every cost that a plan has. Easy!
by fcirullo
Fri Feb 10, 2012 9:27 am
Forum: Personal Investments
Topic: how do employers pick funds for 401k
Replies: 23
Views: 4599

Re: how do employers pick funds for 401k

Many employers won't hear their employees out! It's a mistake because they could have a much better 401(k) or 403(b) plan, but that's just how it is.

Keep trying anyway...drip on HR or the committee every chance you get. Remember to smile and say nice things such as "This is a good plan, but would you consider the possibility that it can be improved? It may take years before any real changes are made to your plan. Often, changes are done incrementally.
by fcirullo
Fri Feb 10, 2012 9:08 am
Forum: Personal Investments
Topic: how do employers pick funds for 401k
Replies: 23
Views: 4599

Re: how do employers pick funds for 401k

I am replying to this thread as I want to convince my employer. First, try to find out who the real decision maker is. Next, as you approach your employer with your ideas for a 401(k) plan, just remember that employers give themselves reasons to do whatever they want to do at the moment. - Example 1: Let's say that the decision maker (fiduciary), which may be the CEO, president, CFO, Human Resources supervisor, or a committee wants to set up a plan whereby the service providers do all of the work and the employer only has the duty to monitor the service providers. Who do you think the employer will agree to meet with to hear a presentation? The plan consultant who recommends a simple plan that is the lowest cost but requires the employer t...
by fcirullo
Thu Feb 09, 2012 6:15 pm
Forum: Personal Investments
Topic: Vanguard/Ascensus vs. Employee Fiduciary?
Replies: 7
Views: 3151

Re: Vanguard/Ascensus vs. Employee Fiduciary?

In another thread , I mentioned that our 401k committee was down to deciding between Vanguard/Ascensus vs. Employee Fiduciary. There would probably be around a $2000 difference in cost, with EF being the less expensive one. Did you get a side by side comparison? For instructional purposes, would you mind showing it to us? One of the things that could help justify the added expense is the warm and fuzzies people get from dealing with a company that they have heard of: Vanguard, instead of one that most non-bogleheads haven't: EF. Brand is important! Both TPAs have a good reputation, and both have a universe of Vanguard and other funds. Does anyone care to contribute any other arguments for or against either one? Perhaps in the way of educat...
by fcirullo
Thu Feb 09, 2012 11:35 am
Forum: Personal Investments
Topic: Vanguard Ascensus 401K plan - Opinions
Replies: 21
Views: 6140

Re: Vanguard Ascensus 401K plan - Opinions

Ascensus charges approximately $3,600 + $75 * 20 = $5,100. That is about 30 basis points. If there is interest by the board, I can get an exact amount for you. Ascensus is a top quality service provider, IMO. You should be able to get a plan that fits under 1.0%, all in, including the advisor fees. Is $5,100 for twenty employees correct? I hope not because it's more than 30 basis points. In comparison, Employee Fiduciary charges $1,500.00 for twenty eligible employees. If $5,100 is not correct, it would behoove someone from Vanguard or Ascensus to show us how much they charge for twenty eligible employees, complete! I hope that someone from Vanguard or Ascensus will chime in on how much they charge. Also, I hope that other TPAs will show u...
by fcirullo
Fri Feb 03, 2012 4:41 pm
Forum: Investing - Theory, News & General
Topic: New Fiduciary Standard Coming?
Replies: 22
Views: 2551

Re: New Fiduciary Standard Coming?

A fiduciary standard would be a step in the right direction, but no law, rule, or regulation will prevent a RIA, Registered Representative or insurance agent from selling expensive services, investments, and/or insurance products that are not in the client's best interests.

The real cure is for the public to take responsibility for learning which investments and insurance products make sense.
by fcirullo
Fri Feb 03, 2012 12:31 pm
Forum: Investing - Theory, News & General
Topic: More new rules for 401k plans
Replies: 8
Views: 849

Re: More new rules for 401k plans

Paul, thank you for the update! It's obvious that 401(k) and 403(b) plans are becoming even more complicated, and I don't see how it will help anyone. I don't know how you all are feeling these days, but reading this press release from the DoL gave me a headache: http://www.dol.gov/ebsa/newsroom/2012/11-1653-NAT.html . At the end of the day, the very best way for employers and employees to help themselves is to hire a low cost recordkeeper and administrator, select a core menu of low cost index funds, and make the 401(k) or 403(b) plan as simple as possible with as few moving parts as possible. No one will take you to court for making your plan simple, but you may get sued if you can't possibly monitor all of the moving parts that the compl...
by fcirullo
Fri Feb 03, 2012 8:44 am
Forum: Investing - Theory, News & General
Topic: 403 b: alternatives to Valic
Replies: 7
Views: 2574

Re: 403 b: alternatives to Valic

Finally managed to transfer the account out of valic to vanguard. Valic created a lot of small stumbling blocks while I was trying to take my money out. Congratulations! Thank you for keeping us informed...your success will encourage others to ask for what they want and be persistant. I am wondering why there are so many plan administrators who select those high fees plan for poor NGO customers!! Who knows--every employer gives themselves reasons for taking a certain action. A mistake looks like a great idea at the time. What we can do is educate ourselves and others on what a low cost plan really looks like. P.S. Regarding education, please remember to share this article http://www.bogleheads.org/wiki/Setting_up_a_401k_plan and the follow...
by fcirullo
Wed Feb 01, 2012 9:21 am
Forum: Investing - Theory, News & General
Topic: What are your 403b/401k fees?
Replies: 33
Views: 3932

Re: What are your 403b/401k fees?

Good question and great answers. Your answers prove that employers really can set up a plan that has a low cost recordkeeper and administrator as well as a menu of low cost index funds. It's easy to hire a TPA who can show you how to set up a truly low cost plan that uses a menu of index funds. So, why do so many employers still talk to the experts who set up plans that cost more than they should; especially, since the new rule on reporting costs will become effective soon? I'm interested in hearing your opinion: What would you say to catch an employer's ear so that he or she will hear you out? (Remember, the companies that sell 401(k) and 403(b) plans that cost more than they should spend billions on advertising and training their sales pe...
by fcirullo
Tue Jan 10, 2012 10:34 am
Forum: Personal Investments
Topic: Helping My Employer With Our 401K
Replies: 25
Views: 3750

Re: Helping My Employer With Our 401K

Oh, I almost forgot. When you make the case for including a menu of low cost index funds and hiring a low cost recordkeeper and administrator, show them why everyone who works for your company will save time, too. And remember to show the plan's fiduciaries how they will manage their risk better by using low cost index funds, a low cost recordkeeper and administrator, and making the plan simple. To learn more, you can read the following article before you make the presentation. Link to article - http://www.bogleheads.org/wiki/Setting_up_a_401k_plan . Below are two ideas that are in the article: - Communication How employers and employees communicate with each other matters to the success of your 401(k) or 403(b) plan. And how families commu...
by fcirullo
Tue Jan 10, 2012 9:08 am
Forum: Personal Investments
Topic: Helping My Employer With Our 401K
Replies: 25
Views: 3750

Re: Helping My Employer With Our 401K

I'm hoping fellow Bogleheads can lend advice on a few topics: (a) Advice about which fund choices I should argue to have added/removed from our 401k plan. (b) How I can best accomodate non-Boglehead minded coworkers. If it were just me I see no reason to have active funds at all for example. Would it be irresponsible of me to have nothing but no-load, low ER, non-active funds for our selection? (c) Recommendations for alternate 401k providers. I looked into moving our company to use Vanguard directly, but as best I can tell from vanguard.com we are too large to setup a 401k with them directly. Thoughts? Thanks in advance! (a) Make the case that officers and employees will earn more money, long term, if the plan includes a core mix of index...
by fcirullo
Fri Jan 06, 2012 10:57 am
Forum: Investing - Theory, News & General
Topic: 401(k) - Reminder about some great resources you can use
Replies: 0
Views: 253

401(k) - Reminder about some great resources you can use

It's a new year and a great time to lobby to improve your 401(k) or 403(b) plan.

Below is a link that has some great resources that you can use to improve your 401(k) or 403(b) plan FAST!
What can you learn from the information on these links?
--1. How to set up, manage, and monitor a truly low cost plan.
--2. How to lobby for a low cost plan that uses a menu of index funds.
--3. How to set up a self-directed brokerage account the right way for any employee who believes that he or she can beat a core mix of index funds in performance.

Link: http://www.bogleheads.org/forum/viewtop ... 5#p1158145

Best wishes,

Frank R. Cirullo
by fcirullo
Fri Jan 06, 2012 9:49 am
Forum: Personal Investments
Topic: Vanguard Ascensus 401K plan - Opinions
Replies: 21
Views: 6140

Re: Vanguard Ascensus 401K plan - Opinions

SJG wrote:Hi,

I'm a looongtime lurker and first time poster. Everybody, thank you for the education I've gotten here.

I'm switching my compamy's 401K plan from Transamerica to the newish Vanguard/Ascensus platform for small business plans (our assets ~1.5M).
Congratulations! As you can see, you will get some great help, right here, with setting up, managing, and monitoring your plan.

If you Keep the plan simple, you will save your time as well as the employees' time. And your plan will cost up to 80% less than the most expensive plans that will be set up by experts in 2012...even with the new cost disclosure regulations.

Best wishes,
Frank R. Cirullo
by fcirullo
Sat Dec 17, 2011 8:41 am
Forum: Investing - Theory, News & General
Topic: "Companies shake up 401(k) plans, cut fees "
Replies: 5
Views: 925

Re: "Companies shake up 401(k) plans, cut fees "

It's a good article. Thank you for posting it! Going into 2012, plan costs are being disclosed as never before. Yet, many employers still lack the education to know who to trust for advice. And the United States Department of Labor will never advise employers to use index funds and how much those index funds should cost. Nor will the DOL advise employers as to how much they should pay for services such as advice, recordkeeping, administration, education for participants, etc. because that is not their role. What drives down 401(k) plan costs? Technology and competition for the plan sponsor's business, right? And to compete for your 401(k) plan's business, experts spend many hours in sales training where they learn how to tell a convincing s...
by fcirullo
Wed Dec 07, 2011 3:02 pm
Forum: Personal Investments
Topic: In case you missed it, SmartMoney wants your input
Replies: 0
Views: 342

In case you missed it, SmartMoney wants your input

In case you missed seeing it this afternoon at "Investing - Theory, News & General," Ian Salisbury, Staff Writer, SmartMoney, is asking for your help on a story that he is writing. I hope you will give him any help that you can. Best wishes, Frank Note: Here is what Ian said to me in an e-mail: Frank -- Thanks so much for your help. SmartMoney, the Wall Street Journal's monthly personal finance magazine, is writing a story on how investors can get the most out of their 401(k)s. One piece of advice we've often seen on Bogleheads is: Contribute enough to your 401(k) to receive the company match, then open an IRA where you can find a more extensive and/or cheaper menu of funds and contribute as much as you can; then go back to th...
by fcirullo
Sun Dec 04, 2011 8:46 am
Forum: Investing - Theory, News & General
Topic: 401K from an employer's perspective
Replies: 17
Views: 1629

Re: 401K from an employer's perspective

Of course, this would eliminate the $36,000 tax deferral that I normally get but it would save me about $7,000/year. Even without the employee preference issue, I think that spending $7000 to get a tax deferral of $36K is a bad deal. I haven't presented it yet to the employees but I suspect that they would be happier to get cash in hand (even though it's 40% less than what I would normally put in their 401K's). ANy opinions? Always decide what's best for you. Is a low cost plan with a menu of low cost index funds and giving employees a generous match in your best interests? 1. Are the tax benefits and your investments in the plan helping to build your family's wealth? Is the pay at your company and the generous match motivating key employe...
by fcirullo
Sat Dec 03, 2011 10:36 am
Forum: Investing - Theory, News & General
Topic: Rick's Rules for Lump Sum Investing
Replies: 215
Views: 19403

Re: Rick's Rules for Lump Sum Investing

Rick Ferri wrote:Here are a few simple rules, or guidelines if you prefer, to help decide on a dollar-cost average or all-in strategy:
4 Rules for Investing a Lump Sum
Good article, Rick! Rules and guidelines are good...I like rules and guidelines.

Great discussion, too. It can make us think about how we really feel about gains, losses, and missed opportunities.
by fcirullo
Sat Dec 03, 2011 8:37 am
Forum: Investing - Theory, News & General
Topic: At a glance, can you spot an expensive 401(k) plan?
Replies: 19
Views: 2031

Re: At a glance, can you spot an expensive 401(k) plan?

Tip: If you are a fiduciary of a plan, you can use this exact same poll to learn how effective your education program is. Step 1 - After employees take the poll, ask this question: For those who answered "No," would you like to know how to spot an expensive plan at a glance? Why ask this question? Because by answering "yes" to your question their mind will be open to learn. Step 2 - Teach them to spot the red flags and clues. (You can see many of the red flags and clues in this thread.) Step 3 - Teach them how your plan is set up and why it was set up that way. Step 4 - Ask them to teach their beneficiary(s) what they have learned. Why? We learn by teaching. And it will keep the beneficiaries informed. They, too, will b...
by fcirullo
Fri Dec 02, 2011 11:59 am
Forum: Investing - Theory, News & General
Topic: At a glance, can you spot an expensive 401(k) plan?
Replies: 19
Views: 2031

Re: ALL 401K fees to be revealed in January !!!

The answer is "probably not." Hi Taylor, I agree! Look at it this way. If we had a list of organizations that have a 401(k) or 403(b) plan and randomly selected one thousand to take this same poll, most employees would probably answer "No" to the question. The reason why most people who read the threads on this Web site answered "Yes" to the question is because they have learned what to look for in a 401(k) or 403(b) plan. Good for them! By the way, thank you for posting the article by Constance Gustke. It's a good article. And it ends with this statement: Will more disclosure push 401(k) plan fees down? If the past is any indication, probably not by much if at all. But the bonus is clear data for making sharp...
by fcirullo
Thu Dec 01, 2011 10:54 am
Forum: Investing - Theory, News & General
Topic: At a glance, can you spot an expensive 401(k) plan?
Replies: 19
Views: 2031

Re: At a glance, can you spot an expensive 401(k) plan?

I love this Web site because in one place you get honest answers and information that you can't get anywhere else. I replied, "But it has had a whole set of index funds with expense ratios of 0.1% for a few years now." They said, "Oh, I didn't know that." As you said, it is a sad story. But it has a happy ending for the employees who now know the truth about your plan! Wouldn't it be great if more fiduciaries took time to speak with employees as you did. You never know if an education program is effective until you ask employees the right questions. By the way, four people answered "No" to the question. If you are one of the four or you are reading this thread for the first time, please let us know if the excel...
by fcirullo
Thu Dec 01, 2011 8:42 am
Forum: Personal Investments
Topic: What happens if you exceed the 401k max contribution limit?
Replies: 12
Views: 4916

Re: What happens if you exceed the 401k max contribution lim

This post is for anyone who missed it. On October 20, 2011 the IRS Announced Pension Plan Limitations for 2012.
http://www.irs.gov/newsroom/article/0,, ... 82,00.html

1. The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $16,500 to $17,000.
2. The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
by fcirullo
Tue Nov 29, 2011 8:34 am
Forum: Investing - Theory, News & General
Topic: At a glance, can you spot an expensive 401(k) plan?
Replies: 19
Views: 2031

At a glance, can you spot an expensive 401(k) plan?

At a glance, can you spot an expensive 401(k) plan?

What have you learned about 401(k) plans from this Web site? For instance, if you saw some things that exhibited a lack of common sense or sound judgment on the part of the named fiduciary(s), what would they be?
by fcirullo
Sun Nov 27, 2011 9:21 am
Forum: Investing - Theory, News & General
Topic: Are ETF based 401K's the "cure" for exorbitant plans?
Replies: 9
Views: 1856

Re: Are ETF based 401K's the "cure" for exorbitant plans?

So what do you guys think? Regardless of who pays for the plan and its mix of investments, always set up a 401(k) or 403(b) plan so that it is low cost and easy to manage and monitor. For instance... 1. Recordkeeping and administration: Pay not more than the benchmark of $30.00, per year, per eligible employee. 2. Index funds: Select a core mix of the lowest cost index funds that your plan can get. These days the cost will be not more than 0.07% to 0.25%, per year, for any size plan including a brand new plan. ETFs are fine providing they are low cost. However, some people may not want to use ETFs, so allow them to use low cost open-end index funds. 3. Remember, education is the key to the success of your plan. So, educate the employees so...
by fcirullo
Fri Nov 25, 2011 4:39 pm
Forum: Personal Investments
Topic: Automatic 401(k) opt-in, any downsides?
Replies: 45
Views: 3751

Re: Automatic 401(k) opt-in, any downsides?

livesoft wrote:I've heard a rumor that some plan providers reduce fees if the plan is an auto-enrollment plan. Anybody else know of that? Frank?
If it is an an asset based fee or a per participant fee, It would make sense to give a discount because more participants would likely mean more revenue for the service provider.

However, since service provider fees are negotiable it would be a mistake if a plan sponsor (employer) did not negotiate the best deal for each fee or cost to the plan...auto-enrollment program or not.

Edited on 11/25/2011 to include "or a per participant fee" in one sentence. A second edit was done today to correct a typographical error on the date of the edit.
by fcirullo
Fri Nov 25, 2011 12:06 pm
Forum: Investing - Theory, News & General
Topic: Comparing 401(k) Fees in the Age of Disclosure
Replies: 2
Views: 582

Re: Comparing 401(k) Fees in the Age of Disclosure

After reading the above, many of my former colleages would ask "what's a fee?" Sad, but unfortunately all too true. In sum, I would love, but don't expect, major changes in the 401K sytesm. Exactly! Nothing will change even with new laws, rules, and regulations. Why? Many employers will continue to trust the advice of experts who set up expensive 401(k) and 403(b) plans. And the The U.S. Department of Labor will never show plan sponsors what a truly low cost recordkeeper and administrator looks like, nor will they advise plan sponsors to use a core mix of low cost index funds in the menu. Furthermore, employees who sue their employer regarding the high cost of their plan may or may not win in court. By far, the best solution for ...
by fcirullo
Fri Nov 25, 2011 11:41 am
Forum: Personal Finance (Not Investing)
Topic: I created the best 401k of all time
Replies: 34
Views: 6616

Re: I created the best 401k of all time

Because the ideas in this thread can help employers set up a plan that employees will be proud of I included it in Case studies at the article Setting up a 401(k) plan
by fcirullo
Fri Nov 25, 2011 10:50 am
Forum: Personal Finance (Not Investing)
Topic: I created the best 401k of all time
Replies: 34
Views: 6616

Re: I created the best 401k of all time

Take it from Bogle, the market is usually mostly efficient as the efficient market hypothesis is usually right often enough that you don't want to test it by trying to beat the market. But the Cost Matters Hypothesis is absolute. So I designed a 401k with the following Vanguard funds: Target Retirement (for employees) Prime Money Market TIPS fund Short Treasury index Short Term Investment Grade Intermediate Treasury Index Long Treasury Index Total Stock Market Small Cap Value Total International FTSE All World Ex-US Small Cap ETF Emerging Markets ETF (note due to purchase fee, Int's Small Cap and Emerging Markets can only be offered as ETF in a 401k) REIT Index Pimco Commodity Real Return (for contango free commodity exposure) PCRIX Pimco ...
by fcirullo
Fri Nov 25, 2011 10:04 am
Forum: Personal Investments
Topic: Automatic 401(k) opt-in, any downsides?
Replies: 45
Views: 3751

Re: Automatic 401(k) opt-in, any downsides?

Great question, livesoft! Excellent responses, too.

I have included this thread in Forum discussions at the article
Setting up a 401(k) plan
by fcirullo
Thu Nov 10, 2011 9:59 am
Forum: Investing - Theory, News & General
Topic: 403 b: alternatives to Valic
Replies: 7
Views: 2574

Re: 403 b: alternatives to Valic

ypant wrote:I wanted to roll over the fund to Vanguard and I contacted Valic and they told me that I would have to pay extra fees or between 3 to 4% just to take the money out of Valic.
My rule is to ask for what I want and let the fiduciary say "Yes" or "No" to my request. So, ask HR to have the organization pay your surrender charges since they created the mess. If the organization won't pay, ask HR to ask VALIC to waive the surrender charges.
by fcirullo
Thu Nov 10, 2011 8:44 am
Forum: Investing - Theory, News & General
Topic: Please help with 401(k) fund selection
Replies: 4
Views: 567

Re: Please help with 401(k) fund selection

MitchL wrote:I've mentioned "costs," "past performance is no guarantee...," "luck," "Bill Miller," & "monkeys throwing at dart boards" to no avail.
Can you help me with other arguments?
It appears that your idea is incremental change. So, show us the index funds that your plan can include in its menu of investments. Including a mix of index funds in the menu is a way to manage your fiduciary risk by giving employees a choice between a core mix of managed funds and a core mix of index funds. Educating employees on how low cost index funds match the market's performance less your cost and why managed funds are likely to underperform a core mix of index funds long term is the key.
by fcirullo
Tue Nov 08, 2011 12:13 pm
Forum: Personal Finance (Not Investing)
Topic: 401k horror story of the day
Replies: 11
Views: 3341

Re: 401k horror story of the day

Regarding the mindset of many plan sponsors, it would be instructive for people who want to lobby for a plan that uses a menu of index funds to understand what prompted the fiduciary(s) for your plan to switch from American Funds Growth Fund of America, RGAGX, with an ER of 0.34 to Nuveen-Winslow Large Cap Growth, NVLIX with an ER of 1.75. Ask HR for the minutes of the meeting, which you are entitled to see. And if you choose to, give us a summary of the thinking behind this change to your plan. For instance, the minutes should say why the fiduciary(s) decided not to replace American Funds Growth Fund of America with a like-kind index fund. And it should give the reasons for selecting Nuveen-Winslow Large Cap Growth. Frank P.S. You are also...
by fcirullo
Mon Nov 07, 2011 8:05 am
Forum: Investing - Theory, News & General
Topic: 401(k) - Set up a plan that solves the employees' problems.
Replies: 1
Views: 339

Re: 401(k) - Set up a plan that solves the employees' proble

What advice would you give to employers? Here is my advice to employers. When employees lose more money in a 401(k) or 403(b) plan they look for someone to blame. Before a lawsuit (frivolous or not) is filed, employers can make improvements to their plan so that they are less likely to be sued. Be prepared. If you are an employer, make a list of issues that other employers have been taken to court for and don't do that! 1. 2. 3. 4. 5. Training on how to set up a plan usually comes from the school of hard knocks. But on this Web site you are getting the rare opportunity to learn from people who have been there and done that, and it's free! You won't be be distracted anymore by gimmicks such as "secret" techniques for beating the m...
by fcirullo
Sun Nov 06, 2011 1:04 pm
Forum: Personal Investments
Topic: Help please -- Need articles on these two 401(k) issues
Replies: 3
Views: 615

Re: Help please -- Need articles on these two 401(k) issues

Any suggestions? When you set up a plan the right way, you just don't have the same problems that other plans have with conflicts of interest, hidden costs, selecting a menu of investments, hiring a recordkeeper and administrator, setting up an education program for employees, managing and monitoring the plan, and hiring a plan consultant or investment adviser (if you choose to hire one). People who set up plans that use managed funds only and expensive recordkeeping and administration have the same problem, which is they don't know what an optimal 401(k) or 403(b) plan looks like. So, what do they do? Well, they waste their time by reading and listening to everything that is put in front of them--they are like a sponge and they get confus...
by fcirullo
Fri Nov 04, 2011 10:35 am
Forum: Investing - Theory, News & General
Topic: 401(k) - Set up a plan that solves the employees' problems.
Replies: 1
Views: 339

401(k) - Set up a plan that solves the employees' problems.

Businesses make money by creating something that solves people's problems. But when employers set up a 401(k) or 403(b) plan that costs more than it should, instead of solving the problems that employers and employees run into with the complicated, expensive, plans they create problems that don't exist with a simple, low cost, plan. The bottom line is this: Setting up a plan that is complicated and expensive wastes the time and money of both the employer and the employee. Prescription: Caution is your friend. Manage the risk of being a plan sponsor and a fiduciary by hiring a low cost recordkeeper and administrator (pay not more than $30.00, per year, per eligible employee) and select a menu of low cost index funds. Next, set up a low cost ...
by fcirullo
Fri Nov 04, 2011 8:59 am
Forum: Investing - Theory, News & General
Topic: Anyone ever convinced their company to change 401k Providers
Replies: 25
Views: 3278

Re: Anyone ever convinced their company to change 401k Provi

The current 401k is administered by Merrill Lynch and we have 14 active managed mutual funds to choose from with an average ER of 1.13%. Ask HR which index funds are included in the plan's self-directed brokerage account and how much it will cost you per year to set up an account. There may be a set up fee, brokerage commissions, and an annual fee. I am interested in learning more about how much it cost employers to provide a 401k. I had a 401k plan by Merrill Lynch in the past and it seems like they are all about expensive investments. Use the following as a guide: Plans should pay not more than $30.00, per year, per eligible employee for recordkeeping and administration, and these days a mix of index funds should cost the employees 0.07%...