Advice on adding funds to 401k menu

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villars
Posts: 172
Joined: Sat Jan 18, 2014 11:07 pm

Advice on adding funds to 401k menu

Post by villars » Sun Mar 02, 2014 9:11 pm

My employer's current 401K includes only actively managed funds ( which have done well, BTW), but no index funds.
After much lobbying, our plan advisor has agreed to add Index funds. He forwarded me a spreadsheet ( provided by the TPA) of all funds that could be added to current platform.
There is a limit of 3 , possibly 4 funds we can add.

I am looking to have one US Stock index, one International Stock index, and one Bond index to allow a 3-fund lazy portfolio approach

Unfortunately there are no Vanguard or Fidelity Spartan funds in the list.
I went through the spreadsheet and picked the index funds with lowest expense ratios.

Here are my finalists. The first expense number is the prospectus expense ratio , the second number are the additional 12b-1 and/or Sub-TA fees.


For US Stock portion

PREIX – T Rowe Price Equity Index 500 : 0.28+0.15 =0.43% with 0.5% redemption fee
TIQRX TIAA-CREF Equity Index Fund Retirement : 0.32+0.25= 0.57%
TRSPX TIAA-CREF S&P 500 Index R : 0.32+0.25= 0.57%
POMIX T. Rowe Price Total Eqty Mkt Index Inv : 0.36+0.15=0.51%, 0.5% redemtion

For US Bond ( Intermediate term):

PBDIX T. Rowe Price U.S. Bond Enhanc Index Inv : 0.30+0.15=0.45% with 0.5% redemption fee
PBIQX Principal Bond Market Index Fund R5: 0.51+0.25=0.76%

For international Equity

TRIEX TIAA-CREF International Equity Index R : 0.33+0.25=0.58% with 2% redemption fee
PIEQX T. Rowe Price Intl Eqty Index Inv : 0.50+0.15=0.65% with 2 % redemption fee
PIIQX Principal Intl Equity IndexR5 : 0.58+0.25=0.83%

I am leaning towards TIQRX for US equity , PBDIX for bonds and PIIQX for international.

Would these funds work for a 3-fund portfolio?
Are these expenses within usual range for 401k plans?

any thoughts or comments are appreciated.

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Random Musings
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Location: Pennsylvania

Re: Advice on adding funds to 401k menu

Post by Random Musings » Sun Mar 02, 2014 9:37 pm

Our plan only has two index funds at 0.18%. Although you are getting three asset class choices, your plan advisor is making sure that the choices, after costs, give the actives a good chance to outperform. Plus, it keeps putting more money in their pockets.

Frankly, I'd reply with the comment "is that the best you can do, high ER index funds, some with back end loads?"

RM
I figure the odds be fifty-fifty I just might have something to say. FZ

livesoft
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Re: Advice on adding funds to 401k menu

Post by livesoft » Sun Mar 02, 2014 9:55 pm

Random Musings wrote:Frankly, I'd reply with the comment "is that the best you can do, high ER index funds, some with back end loads?"

RM

That's how I would react as well. You might tell your employer that they should be able to negotiate a lower fee for services and have index funds. Simply threatening to take the firm's business elsewhere will do wonders.
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kerplunk
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Joined: Sun Apr 17, 2011 9:58 pm

Re: Advice on adding funds to 401k menu

Post by kerplunk » Sun Mar 02, 2014 10:09 pm

A redemption fee for an S&P 500 index fund that already has a higher than optimal expense ratio? :annoyed

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