Review of my employer provided 401 & 457 plan

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Joined: Wed Dec 26, 2012 2:22 pm

Review of my employer provided 401 & 457 plan

Post by rrauch77 » Wed Dec 26, 2012 3:13 pm

I am very new to investing and I would love to get some advice on the funds that I am currently contributing to.

A little back ground- I'm 35y and I work in public safety. The first 10 years of my career I was provided a defined pension which I froze before I left. I switched departments last year and my new employer provides a 401a and 457b style retirement plan. They contribute 12% to the 401 and match up to 5% in the 457. I contribute an additional 15% into the 457. The plan is managed by MassMutual Retire Smart and I am restricted to contributing to the funds they provide. I've tried to select funds based on the following philosophy -Growth, Growth and Income, International, and aggresive growth funds.

Total income from this job is around 55K counting OT and Bonuses. Unfortunately, my employer only contributes based on my base salary of 34K.

My current balance in both funds is

Is this the best course of Action? I'm worried I may be paying too much in fee's or that I may be in too many different funds. Or that I may be in the wrong funds all together.

These are the funds that they offer. The funds that I'm contributing to along with the fee % are in bold.

SAGIC Core Bond 60425
Vanguard Short-Term Treasury Fund
MassMutual Select PIMCO Total Return Fund
PIMCO Real Return Fund
PIMCO Long Term US Government Fund
RidgeWorth High Income Fund 5% (Net Exp 1.01% Annual Operating Exp 1.01% 12b-1 Fee .30%)
Templeton Global Bond Fund
American Century LIVESTRONG Income Portfolio Fund
American Century LIVESTRONG 2015 Portfolio Fund
American Century LIVESTRONG 2025 Portfolio Fund
American Century LIVESTRONG 2035 Portfolio Fund
American Century LIVESTRONG 2045 Portfolio Fund 15% (Net Exp 1.18% Annual Operating Exp 1.18% 12b-1 Fee .25%)
American Century LIVESTRONG 2055 Portfolio Fund
MM S&P 500 Index Fund 20% (Gross Exp .90% Net Exp .65% Contractual Fee .25%)
Henssler Equity Fund
American Funds Growth Fund of America
Invesco Mid Cap Core Equity Fund
Northern Mid Cap Index Fund 10% (Prospectus Net Exp .16% Total Annual Operating Exp .53% Contractual Exp .37%)
Select Mid Cap Gr Eq II Fd (TRP/Frontier) 10% (Gross Exp 1.45% Net Exp 1.35% Contractual .10%)
Invesco Small Cap Value Fund
Northern Small Cap Index Fund
Nuveen Small Cap Select Fund
American Funds Capital World Growth and Income Fund 10% (Net Exp 1.10% Annual Operating Exp 1.10% 12b-1 Fee .50%)
American Funds EuroPacific Growth Fund
Oppenheimer Developing Markets Fund 20% (Net Exp 1.30% Annual Operating Exp 1.30% 12b-1 Fee .25%)
Oppenheimer Real Estate Investment Trust Fund 5% (Net Exp 1.50% Annual Operating Exp 1.69% 12b-1 Fee .23%)
MFS Utilities Fund
PIMCO Commodity Real Return Strategy Fund
Invesco Energy Fund
BlackRock Health Sciences Opportunities Fund 5% (Net Exp 1.32% Annual Operating Exp 1.32% 12b-1 Fee .25%)
Franklin Gold and Precious Metals Fund
ING Greater China Fund

Sorry If I left anything out. Thanks in advance.

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Re: Review of my employer provided 401 & 457 plan

Post by patrick » Wed Dec 26, 2012 5:31 pm

To evaluate the plan fully it would be helpful to see the fees with each investment choice, not just those you currently use. Also, what really matters in regards to fees is the total amount of fees you would pay for each option. It is not completely clear which (if any) of the various numbers listed is actually the total fees charge to your account (of course, it is likely the plan itself which is largely to blame for confusion here).

From the information you have given so far, I don't think this plan is so bad that you should avoid it altogether. There are certainly much worse plans -- if you look through the old posts on this board you can find plenty of them! I believe the standard order of investing priority is correct for your situation (depending on how much you dedicate to long term savings you may not get all the way to the last step):

1) First, invest enough in the workplace plan to get the full match (where you use the lowest cost choices among the ones available)
2) Then invest in your own IRA up to the limit (where you only use funds that have very low fees)
3) Then invest more in the workplace plan up to its maximum (where you use the lowest cost choices among the ones available)
4) Finally, invest any remaining savings in a regular taxable account (where you only use funds that have very low fees)

If I am reading the numbers right, the mid cap index fund has significantly lower costs than the other stock funds. If I were in this plan, I would put most (and perhaps all) of my stock investments within the plan in the mid cap index fund. In addition to using the mid cap fund for the stock portion of my investments, I might also use the Vanguard bond fund since it is probably lower cost than most of the others (though this depends on how much extra fees the plan adds to the low fees charged by Vanguard). I wouldn't put anything in the extremely high cost funds charging over 1%. For other categories of assets like foreign stocks I probably wouldn't buy any of them inside the plan but instead buy them in an IRA or taxable account.

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Re: Review of my employer provided 401 & 457 plan

Post by Mudpuppy » Wed Dec 26, 2012 6:06 pm

In addition to seeing the ER for each fund, as patrick requested, it would also be helpful to know your current asset allocation (percentages) between the funds you are currently using. It would also be helpful to follow the standard format for asking portfolio questions: ... f=1&t=6212

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