Good Post on Costs of Bad 401(k) Plans

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JamesSFO
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Good Post on Costs of Bad 401(k) Plans

Post by JamesSFO »

Blog post here: http://baselinescenario.com/2014/02/26/ ... 01k-plans/

Snippet:
...The first, which I discussed here, analyzed the losses that 401(k) plans—or, rather, their administrators and managers—impose on plan participants by inflicting high-cost mutual funds on them. The second, “Beyond Diversification: The Pervasive Problem of Excessive Fees and ‘Dominated Funds’ in 401(k) Plans,” discusses what we should do about this problem. To recap, the empirical results are eye-opening.

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Hint: he thinks 401K fees are too high
fcirullo
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Re: Good Post on Costs of Bad 401(k) Plans

Post by fcirullo »

JamesSFO, thank you for posting this article. It's a good article that should open the eyes of the employers who read it. But it probably won't change how most employers manage their 401(k) plan. Why? It's because employers give themselves reasons to do whatever they want to do at the moment! For instance, if they feel that certain managed funds will outperform low cost index funds long term, they will select a menu of managed funds. If they feel that the cost of administration of their plan is reasonable, they will not switch to a lower cost administrator. See?
Frank R. Cirullo | | "It isn't what we don't know that gives us trouble, it's what we know that ain't so." -- | Will Rogers
Grt2bOutdoors
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Re: Good Post on Costs of Bad 401(k) Plans

Post by Grt2bOutdoors »

http://papers.ssrn.com/sol3/papers.cfm? ... id=2399531

The title of the research report is: Beyond Diversification: The Pervasive Problem of Excessive Fees and Dominated Funds in 401K Plans.
The authors are: Ian Ayres - Yale University and Quinn Curtis - University of Virginia Law School
Published February 21, 2014

Happy Reading!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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