Help me fix my company's 401k plan

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Luke Duke
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Help me fix my company's 401k plan

Post by Luke Duke »

A couple of months ago I complained about the fund selection. I was just asked which funds I would like to see added. Here is a list of the current offerings. I would like to suggest as few funds as possible so it doesn't appear that I'm being too much of a PITA.

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PFInterest
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Re: Help me fix my company's 401k plan

Post by PFInterest »

you need a s&p500, extended market, international, and a bond fund. all indexed. thats it.
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rosylenm
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Re: Help me fix my company's 401k plan

Post by rosylenm »

Just three funds--

VTSAX--Vanguard Total Stock Market Admiral
VBTLX--Vanguard Total Bond Index Admiral
VFWAX--Vanguard FTSE All World Ex US Admiral

Institutional versions would be even better.

When I suggested above at my workplace, only bond one was approved by investment committee. Though classes at least changed from Investor to Admiral for all Vanguard offerings.

It's interesting to see other people's choices and also comforting to know my workplace isn't the only one with Frankenstein-like offerings.

Good luck!
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whaleknives
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Re: Help me fix my company's 401k plan

Post by whaleknives »

Luke Duke wrote:A couple of months ago I complained about the fund selection. I was just asked which funds I would like to see added. Here is a list of the current offerings. I would like to suggest as few funds as possible so it doesn't appear that I'm being too much of a PITA. . .
You were looking at 80/10/10 Fidelity 500 Index Fund Adv FUSVX 0.05%/Vanguard Mid-Cap Growth Index (Adm) VMGMX 0.08%/Vanguard Strategic Small Cap Equity (Inv) VSTCX 0.29% previously (viewtopic.php?f=1&t=216224&p=3322680#p3322680).

If your goal is still to mimic Vanguard Total Stock Market Index (VTSAX), then you can do it with FUSVX and just one new index fund, Vanguard Extended Market Index (VEXMX) or similar. See the Wiki's Approximating total stock market for other examples.
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Topic Author
Luke Duke
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Re: Help me fix my company's 401k plan

Post by Luke Duke »

This is how I plan to reply:

Add Total Bond Market Index (VBTLX), Total International Stock Market Index (VTIAX) and one (or both) of the following 2 funds:
Total Stock Market Index (VTSAX) or Extended Market Index (VEXAX)

This will allow a person to create a well-rounded, low-cost portfolio within their 401k.

There are also some people who are market shy or nearing retirement that might appreciate a Money Market fund. Prime Money Market (VMRXX) is a good choice.
CantPassAgain
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Re: Help me fix my company's 401k plan

Post by CantPassAgain »

PFInterest wrote:you need a s&p500, extended market, international, and a bond fund. all indexed. thats it.
I suggested this (plus a stable value fund) at a 401K committee meeting at my former workplace. Everyone looked at me like I had three heads.
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Tyler Aspect
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Re: Help me fix my company's 401k plan

Post by Tyler Aspect »

If you can only add one fund then that should be a total bond market fund, either Fidelity US Bond Index Fund or Vanguard Total Bond Market Index. It would transform the 401k suite from terrible to marginally passable.
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badbreath
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Re: Help me fix my company's 401k plan

Post by badbreath »

PFInterest wrote:
you need a s&p500, extended market, international, and a bond fund. all indexed. thats it.


I suggested this (plus a stable value fund) at a 401K committee meeting at my former workplace. Everyone looked at me like I had three heads.
Thats funny that is what we do have in my Mega Corp fund with Vanguard. The target dates also
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Wildebeest
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Re: Help me fix my company's 401k plan

Post by Wildebeest »

Hi Luke Duke,

This is the Email I sent to my new company's 401 K administrator when I found out that it was run by a Merrill Lynch "Wealth adviser":

Copy and paste from the Wiki

"Dear company plan administrator:

I am appreciative of the company’s providing a tax deferred plan to help employees prepare for retirement by long-term investing. However, after studying the investments available in the plan, I am concerned that there are few options for employees who wish to invest efficiently for the long-term.

Most, if not all, of the fund choices in the company tax deferred plan are high cost actively managed funds which will not do the job of retirement investing. Over long periods of time, even a difference of one percent in fees can add up, through the effect of compounding, to a reduction in the end value of the an employee’s account of almost 20%. After 30 years, that can mean losses exceeding $100,000.

Because many employees are counting on this plan to see them through a lengthy retirement, I believe the company has a fiduciary duty to provide adequate fund investments to attain that goal. That fiduciary duty could be easily met by the addition of just a few index funds to the company plan. Such funds are available from Vanguard and Fidelity. This is a strategy that even Warren Buffet recommends:

"Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals." --Warren Buffett Berkshire Hathaway Annual Letter, 1996

Mr. Buffett’s recommendation is consistent with the great majority of academic research done on investment costs and index fund performance.

The Employee Retirement Income Security Act (ERISA) regulators have recently turned their attention to 401(k) plans with high fees, and as a result there have been a number of lawsuits that have been filed over the issue of high fund expenses. Consequently, I believe that the company could insulate itself from legal problems by providing low cost, index fund options.

Sincerely,

Wildebeest".


I was not surprised I have not received any response one month later.

I would really appreciate if there was a follow up Email suggested in the Wiki as part of the campaign to get a better plan.

I thought the opening Email was a winner
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badbreath
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Re: Help me fix my company's 401k plan

Post by badbreath »

Well you gave them a problem but you forgot to give them a solution. Now they have to figure out what index funds you are talking about.

That is work so no they are not going to do it :annoyed :annoyed
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Helo80
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Re: Help me fix my company's 401k plan

Post by Helo80 »

All that seems to be needed to me is a bond index. Some would want an international index, but that's pure preference.

Basically, the fidelity S&P 500 index at 0.05% is enough to keep me happy. That's where 100% of my 401k monies would be going if I were your colleague. Though, I totally get why some would want a bond index and that's one reason to reach out to your benefits administrator.
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Luke Duke
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Re: Help me fix my company's 401k plan

Post by Luke Duke »

About a month ago my company added the following funds to the offerings:

VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares
VTMGX - Vanguard Developed Markets Index Fund Admiral Shares
VBILX - Vanguard Intermediate-Term Bond Index Fund Admiral Shares

Not exactly what I asked for, but it is a big improvement. I was most impressed that they considered this request from someone that had only been with the company for 4 months. One of the benefits for working for a small company...

Here are the other options for reference. Sorry about the format. Photobucket went kaput.

Investment Asset Class Symbol Fees
Fidelity 500 Index Fund Adv Large Blend FUSVX 0.05%
Vanguard Growth Index Fund (Adm) Large Growth VIGAX 0.06%
Vanguard Mid-Cap Growth Index Fund (Adm) Mid Growth VMGMX 0.07%
Vanguard Consumer Staples Index Fund ADM Consumer Defensive VCSAX 0.10%
Columbia Small Cap Index Fund (R5) Small Blend CXXRX 0.20%
Vanguard Strategic Sm. Cap Equity Fund (Inv) Small Blend VSTCX 0.29%
Payden GNMA Fund Intermediate- Term Government PYGNX 0.69%
American Funds 2020 Trgt Date Retire R4 Target Date 2016-2020 RDCTX 0.73%
Frost Total Return Bond A Short-Term Bond FATRX 0.77%
American Funds 2030 Trgt Date Retire R4 Target Date 2026-2030 RDETX 0.77%
American Funds 2040 Trgt Date Retire R4 Target Date 2036-2040 RDGTX 0.79%
American Funds 2050 Trgt Date Retire R4 Target Date 2046-2050 RDITX 0.79%
Fidelity Small Cap Discovery Small Blend FSCRX 0.87%
T. Rowe Price Growth Stk Adv Large Growth TRSAX 0.93%
American Funds American Bal Fund R3 Moderate Allocation RLBCX 0.93%
Reliance MetLife Series 25157 Class 35 Stable Value QDWGQ 0.94%
FMI International Fund Foreign Large Blend FMIJX 0.94%
First Eagle Global Fund A World Allocation SGENX 1.10%
Third Avenue Real Estate Value Fund I Real Estate TAREX 1.13%
Brown CM Small Company Fund Inv Small Growth BCSIX 1.27%
MSIF Global Opportunity Fund A World Stock MGGPX 1.41%
JP Morgan Mid Cap Value Fund A Mid Blend JAMCX 1.42%
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Ged
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Re: Help me fix my company's 401k plan

Post by Ged »

Luke Duke wrote: Fri Sep 01, 2017 9:07 am About a month ago my company added the following funds to the offerings:

VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares
VTMGX - Vanguard Developed Markets Index Fund Admiral Shares
VBILX - Vanguard Intermediate-Term Bond Index Fund Admiral Shares

Not exactly what I asked for, but it is a big improvement. I was most impressed that they considered this request from someone that had only been with the company for 4 months. One of the benefits for working for a small company...
Wow your fellow employees owe you big for getting these funds into your plan.
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