401k Plan Conversion!

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Topic Author
dignan
Posts: 84
Joined: Mon Nov 23, 2015 12:01 pm
Location: chicago

401k Plan Conversion!

Post by dignan »

Bogleheads,
Thanks to this forum, I was able to get my employer to change the company 401k funds to something better than what we have. Not only are they cheaper expense ratios, but more options are available too. I had sent an email to the operations committee and human resources back in August about the high expense ratios. I thought they ignored me, decided I didn't know what I was talking about, or didn't care. Low and behold I received a letter in the mail stating that the 401k Plan will be converting to new funds along with a blackout date, starting July 3rd. I emailed the operations committee and HR person to thank them. The HR person told me that is was all about getting lower rates. I see this as a win! :sharebeer

Here is my original post about the funds I had to work with.
viewtopic.php?f=1&t=178252

The bold funds are the ones I'm thinking I will use to create my new portfolio asset allocation if I choose not to use a target fund.
New 401k Plan
Ticker Name ExpenseRatio
Large-Cap
AVLIX American Century Value Fund I Class 0.78
MBCZX MassMutual Select Blue Chip Growth Fund Class I 0.66
VFIAX Vanguard 500 Index Fund Admiral Class 0.04
Mid-Cap
MEFZX MassMutual Select Mid Cap Growth Fund Class I 0.73
VIMAX Vanguard Mid-Cap Index Fund Admiral Shares 0.06
VEVRX Victory Sycamore Established Value Fund Class R6 0.59
Small-Cap
GTSFX Invesco Small Cap Growth Fund Class R6 0.74
JSVUX JPMorgan Small Cap Value Fund Class R6 0.77
VSMAX Vanguard Small-Cap Index Fund Admiral Shares 0.06
Developed International
RERGX American Funds EuroPacific Growth Fund® Class R-6 0.50
MKRZX MM MSCI EAFE® R5nternational R5ndex Fund Class I 0.25
FTFGX Templeton Foreign Fund Class R6 0.72
Emerging Market
GTDFX Invesco Developing Markets Fund Class R6 1.00
Real Estate
RRRZX Deutsche Real Estate Securities Fund Class R6 0.53
Intermediate Fixed Income
MSPZX MassMutual Select Total Return Bond Fund Class I 0.34
PIMIX PIMCO Income Fund Institutional Class 0.45
International Fixed Income
ANAIX AB Global Bond Fund Class I 0.57
MEDIX MFS Emerging Markets Debt Fund Class I 0.85
High Yield Fixed Income
AGDIX AB High Income Fund Class I 0.53
Allocation
RFTTX American Funds 2010 Target Date Retirement Fund® Class R-6 0.35
RFJTX American Funds 2015 Target Date Retirement Fund® Class R-6 0.35
RRCTX American Funds 2020 Target Date Retirement Fund® Class R-6 0.37
RFDTX American Funds 2025 Target Date Retirement Fund® Class R-6 0.39
RFETX American Funds 2030 Target Date Retirement Fund® Class R-6 0.41
RFFTX American Funds 2035 Target Date Retirement Fund® Class R-6 0.42
RFGTX American Funds 2040 Target Date Retirement Fund® Class R-6 0.43
RFHTX American Funds 2045 Target Date Retirement Fund® Class R-6 0.43
RFITX American Funds 2050 Target Date Retirement Fund® Class R-6 0.43
RFKTX American Funds 2055 Target Date Retirement Fund® Class R-6 0.45
RFUTX American Funds 2060 Target Date Retirement Fund Class R-6 0.46
HBLVX The Hartford Balanced Income Fund Class R6 0.62
MRCUX MassMutual RetireSMART Conservative Fund Class I 0.47
MRGUX MassMutual RetireSMART Growth Fund Class I 0.64
MROUX MassMutual RetireSMART Moderate Growth Fund Class I 0.59
MRMUX MassMutual RetireSMART Moderate Fund Class I 0.54
MSFKX MFS Total Return Fund Class R6 0.41
whoshighpitch
Posts: 108
Joined: Wed May 08, 2013 9:08 am

Re: 401k Plan Conversion!

Post by whoshighpitch »

Congrats on having that pay off for you. I tried this in 2014; had a whole package of information from Vanguard, all the work done. It saved me a ton in fees and also saved the company money. They took it as I was a complainer and cancelled the whole 401k. They pointed to the fact that I only put in 3% (to get the match) to show it wasn't worth having a 401k at all. I said I only put in 3% because the plan is a ripoff! I left the company not long after.
Phenix
Posts: 8
Joined: Sat May 20, 2017 10:45 pm
Location: Ohio

Re: 401k Plan Conversion!

Post by Phenix »

Big win for you and the future of your portfolio!
Alan S.
Posts: 12669
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: 401k Plan Conversion!

Post by Alan S. »

All these plans are well aware of all the participant class action suits over excessive fees and inferior investment options. Settlement of these suits has ben running heavily in favor of the plaintiffs. Therefore, individual participant requests for improved options will have the effect of pushing the employer to act even sooner than they otherwise would have.

It is interesting how many of these participant actions are from employees of financial services firms. While their employees are perhaps better qualified to recognize poor options, the employers are also better suited to have known better in the first place.
Topic Author
dignan
Posts: 84
Joined: Mon Nov 23, 2015 12:01 pm
Location: chicago

Re: 401k Plan Conversion!

Post by dignan »

You bring up a good point Alan. I hadn't thought of that. I wonder if our advisor would have changed our funds (for the better) if I hadn't mentioned this to our operations committee.

What do bogleheads think of this new asset allocation? I'm changing my allocation to 80/20. I was more aggressive with my previous portfolio because of a lack of bond fund options.

After running this new allocation through Morningstar's Xray, I noticed that the EuroPacific fund has a lot of cash holdings. If that's the case, do I count it as part of my "bond" holdings? This is why I thought to lower the Total Return Bond to 18% vs 20%. I'm debating whether I should include EuroPacific or not. It would help me come close to a Total Stock International allocation... If I add EuroPacific, it would jump my total portfolio ER of .16 to .20. I had also decided against including Global Bond.

VFIAX .04 Vanguard 500 Index Fund Admiral Class Stock-US 34.0%
VIMAX .06 Vanguard Mid-Cap Index Fund Admiral Shares Stock-US 3.0%
VSMAX .06 Vanguard Small-Cap Index Fund Admiral Shares Stock-US 13.0%
MKRZX .25 MM MSCI EAFE® R5nternational R5ndex Fund Class I Stock-Intl 22.0%
RERGX .5 American Funds EuroPacific Growth Fund® Class R-6 Stock-Intl 10.0%
MSPZX .34 MassMutual Select Total Return Bond Fund Class I Bond-US 18.0%
ANAIX .57 AB Global Bond Fund Class I Bond-Intl 0.0%
Topic Author
dignan
Posts: 84
Joined: Mon Nov 23, 2015 12:01 pm
Location: chicago

Re: 401k Plan Conversion!

Post by dignan »

So the plan conversion seems to have gone smoothly and it only took one week. Now that I had a chance to log into our 401k website, I now noticed new fees that were not visible before the conversion. Here is an example of the fee structure. All the funds have an Other Exp fee and Program & Admin Charge.

Vanguard Small-Cap Fund
ADM Share Class
0.05% Invest Mgmt Fee
0.00% 12b-1 Fee
0.01% Other Exp.
0.06% Total Annual Underlying F.O.E
0.50% Program And Administrative Charge
0.56% Total Fees & Charges
0 Fees/Payments We Receive From The Funds

Interestingly, the Vanguard 500 fund's total fees & charges are only 0.04% even though it has a Program & Admin Charge of 0.50% fee. Does this mean I would be paying 0.56% for the Vanguard Small-Cap fund now?

If the employee has to pay the Total Fees & Charges (which I'm trying to find out), I feel like they pulled the rug from under us. Because now the fees basically stayed the same. The only fund that is not being charged the Program & Admin Fee is the Vanguard 500, which still shows a total fee of 0.04%.
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