For i401k, Vanguard does not allow investment into Admiral Shares

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socal777
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For i401k, Vanguard does not allow investment into Admiral Shares

Post by socal777 » Mon Apr 09, 2018 3:11 pm

I just got off the phone with a Vanguard advisor who walked me through thr process of setting up my Individual 401k for my LLC. She mentioned that the i401k is only allowed to invest in Investor Shares, not Admiral Shares. Still the lowest fees but surprised by this policy.

plebeian
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by plebeian » Mon Apr 09, 2018 3:24 pm

You can obtain lower fees by opening a self employed 401k at Fidelity and use Fidelity's Premium Class index funds which are comparable to Vanguard’s Admiral Shares:

https://www.fidelity.com/mutual-funds/f ... ndex-funds
Last edited by plebeian on Mon Apr 09, 2018 3:46 pm, edited 1 time in total.

informal guide
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by informal guide » Mon Apr 09, 2018 3:28 pm

If they can open the i401k as a brokerage account, you can simply buy the ETFs and gain the expense advantage of Admiral shares (but I am not sure it can be done)

socal777
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by socal777 » Mon Apr 09, 2018 3:33 pm

plebeian wrote:
Mon Apr 09, 2018 3:24 pm
You can obtain lower fees by opening a self employed 401k at Fidelity and use Fidelity's Premium Class index funds which is comparable to Vanguard’s Admiral Shares:

https://www.fidelity.com/mutual-funds/f ... ndex-funds
Thanks for sharing this info about Fidelity. I'm so used ot everything defaulting to Vanguard in here I assumed they would also offer the lowest fees for an i401k. Someone elso mentioned Schwab's i401k program allowing me to roll my SEP into the i401k. Wondering if Fidelity would allow that as well? And would Schwab's fees be competitive with Fidelity on this?

What Fidelity funds are the most similar to VTSAX and VBTLX?

socal777
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by socal777 » Mon Apr 09, 2018 3:35 pm

informal guide wrote:
Mon Apr 09, 2018 3:28 pm
If they can open the i401k as a brokerage account, you can simply buy the ETFs and gain the expense advantage of Admiral shares (but I am not sure it can be done)
The Vanguard Advisor told me ETF's not allowed in the i401k. I'm curious why they've got these policies in place? Seems odd...

Spirit Rider
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by Spirit Rider » Mon Apr 09, 2018 3:37 pm

Nothing new there. This has always been true. Not even remotely close to the lowest fees for a one-participant 401k plan.

Fee Min Company TSM
0.030% $ 1 Schwab Total Stock Market Index Fund
0.035% $10,000 Fidelity Fidelity Total Market Index Fund Premium Class
0.150% $ 3,000 Vanguard Total Stock Market Index Fund Investor Shares

Vanguard also does not allow the following that the other two do:
  • IRA Rollover contributions. Can be very helpful for enabling an efficient Backdoor Roth.
  • Employee eligibility restrictions such a one year of service < 1000 hours/year and < age 21. A Vanguard, when you hire your children you can no longer have their individual 401k.

socal777
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by socal777 » Mon Apr 09, 2018 3:39 pm

Spirit Rider wrote:
Mon Apr 09, 2018 3:37 pm
Nothing new there. This has always been true. Not even remotely close to the lowest fees for a one-participant 401k plan.

Fee Min Company TSM
0.030% $ 1 Schwab Total Stock Market Index Fund
0.035% $10,000 Fidelity Fidelity Total Market Index Fund Premium Class
0.150% $ 3,000 Vanguard Total Stock Market Index Fund Investor Shares

Vanguard also does not allow the following that the other two do:
  • IRA Rollover contributions. Can be very helpful for enabling an efficient Backdoor Roth.
  • Employee eligibility restrictions such a one year of service < 1000 hours/year and < age 21. A Vanguard, when you hire your children you can no longer have their individual 401k.
Wow, this is eye opening. Vangaurd is investor friendly in so many areas and then very lacking when it comes to i401k plans...

LOLC2k
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by LOLC2k » Mon Apr 09, 2018 3:41 pm

I think fidelity beats vanguard with solo 401k except theres no roth option.
Ive actually seen people recommend etrade over all others here, which is a rarity here
Vanguards i401k is one of their worse products. If you dont want to roth it, id do fidelity. If you do, id do etrade.

TwstdSista
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by TwstdSista » Mon Apr 09, 2018 3:42 pm

socal777 wrote:
Mon Apr 09, 2018 3:33 pm
Thanks for sharing this info about Fidelity. I'm so used ot everything defaulting to Vanguard in here I assumed they would also offer the lowest fees for an i401k. Someone elso mentioned Schwab's i401k program allowing me to roll my SEP into the i401k. Wondering if Fidelity would allow that as well? And would Schwab's fees be competitive with Fidelity on this?

What Fidelity funds are the most similar to VTSAX and VBTLX?
I rolled my SEP into my Fidelity i401k. I believe Vanguard does not allow this.

The funds to invest in at Fidelity are:
Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
Fidelity Total International Market Index Fund Premium Class (FTIPX) ER 0.10%
Fidelity Total Bond Market Index Fund Premium Class (FSITX) ER 0.045%

socal777
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by socal777 » Mon Apr 09, 2018 3:42 pm

Advice on choosing either E*Trade, Fidelity or Schwab for my i401k? Schwab seems to have the lowest fees and the flexibility, etc.

What are the comparable total market funds for E*Trade?
Last edited by socal777 on Mon Apr 09, 2018 3:46 pm, edited 1 time in total.

plebeian
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by plebeian » Mon Apr 09, 2018 3:44 pm

socal777 wrote:
Mon Apr 09, 2018 3:33 pm
plebeian wrote:
Mon Apr 09, 2018 3:24 pm
You can obtain lower fees by opening a self employed 401k at Fidelity and use Fidelity's Premium Class index funds which is comparable to Vanguard’s Admiral Shares:

https://www.fidelity.com/mutual-funds/f ... ndex-funds
Thanks for sharing this info about Fidelity. I'm so used ot everything defaulting to Vanguard in here I assumed they would also offer the lowest fees for an i401k. Someone elso mentioned Schwab's i401k program allowing me to roll my SEP into the i401k. Wondering if Fidelity would allow that as well? And would Schwab's fees be competitive with Fidelity on this?

What Fidelity funds are the most similar to VTSAX and VBTLX?
Fidelity Total Stock Market Index Fund Premium Class (FSTVX) is similar to VTSAX.

Fidelity U.S. Bond Index Fund Premium Class (FSITX) is similar to VBTLX.

LOLC2k
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by LOLC2k » Mon Apr 09, 2018 3:47 pm

socal777 wrote:
Mon Apr 09, 2018 3:42 pm
Advice on choosing either E*Trade, Fidelity or Schwab for my i401k? Schwab seems to have the lowest fees and the flexibility, etc.

What are the comparable total market funds for E*Trade?
Ive heard Etrade has schwab, fidelity and vanguard offerings. I didnt need to roth, so i went with fidelity for my solo 401k. And its a very small part of my portfolio, i just make some employer contributions. (Hence cant make roth contributions anyhow)
Edit: they do have vanguard and fidelity. They even have the fidelity premium funds (!)

socal777
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by socal777 » Mon Apr 09, 2018 3:54 pm

LOLC2k wrote:
Mon Apr 09, 2018 3:47 pm
socal777 wrote:
Mon Apr 09, 2018 3:42 pm
Advice on choosing either E*Trade, Fidelity or Schwab for my i401k? Schwab seems to have the lowest fees and the flexibility, etc.

What are the comparable total market funds for E*Trade?
Ive heard Etrade has schwab, fidelity and vanguard offerings. I didnt need to roth, so i went with fidelity for my solo 401k. And its a very small part of my portfolio, i just make some employer contributions. (Hence cant make roth contributions anyhow)
Edit: they do have vanguard and fidelity. They even have the fidelity premium funds (!)
Hmm, So E*Trade sounds like it would give me the most flexibility and control to keep fees low.

LOLC2k
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by LOLC2k » Mon Apr 09, 2018 4:24 pm

Its a very valid choice. For me i get most of of my employee side at my 401k so the roth option doesnt matter much.

TwstdSista
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by TwstdSista » Mon Apr 09, 2018 4:27 pm

Does ETrade charge trade fees to buy Fidelity, Schwab or Vanguard funds?

Spirit Rider
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by Spirit Rider » Mon Apr 09, 2018 5:04 pm

TwstdSista wrote:
Mon Apr 09, 2018 4:27 pm
Does ETrade charge trade fees to buy Fidelity, Schwab or Vanguard funds?
It depends on the fund. I believe all index funds are $19.99.

socal777
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by socal777 » Mon Apr 09, 2018 9:00 pm

After looking at the various plans I think I'm going to sign up with E*Trade. I like the flexibility.

Jb526
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by Jb526 » Wed Aug 15, 2018 4:58 pm

As a current i401(k) and Roth i401(k) account holder at Vanguard holding most of my entire portfolio in those two accounts, I too am tempted to move them elsewhere due to the fact that Admiral shares are not available. Ever since opening the account, I have felt shortchanged due to the seemingly unavoidable higher expense ratios even though my balances are 10x the Admiral requirement. E-Trade and TD Ameritrade would definitely be my top choices for an alternative.

However, upon further investigation today, just comparing my current i401(k) portfolio at Vanguard to what I see as being the closest equivalent of the same portfolio through the no-transaction-fee ETFs available at E-Trade, the differences in return seem pretty small.... and some returns are even better at Vanguard, while still being forced to remain in their Investor shares.

Image

Although I consider myself just a novice to slightly moderately experienced investor, these are the concerns that cross my mind:

1. Are the above differences in return significant enough to warrant opening (or transferring from Vanguard) an i401(k) at a different broker (in this case, E-Trade)?

2. Is it better to leave the i401(k) at Vanguard, where loans are not allowed to be taken against the account, so it eliminates that temptation?

3. Is E-Trade worth the inconvenience of having to repeatedly initiate a cash contribution into the i401(k), then wait for the funds to appear in the account before finally purchasing the ETFs in yet another separate transaction (as opposed to Vanguard, where the cash contribution and the selection of funds for purchase are done in one single transaction)?

4. Does the Vanguard i401(k)'s limitation to mutual funds and elimination of ETFs discourage frequent, unnecessary trading within the account?

5. Should one be worried about certain ETFs being removed from E-Trade's "no-transaction-fee" list?

6. Is it possible that Vanguard's expense ratios on Investor shares will go lower, or that Admiral shares will at some point be available within the i401(k)?

Perhaps I'm not taking something else into consideration that I should be. Or maybe it's not appropriate to compare 10-year returns like I have above. And, of course, the scenario would not be the same if I was to use a different portfolio as an example. But Vanguard's i401(k) may not be as bad as it would seem. :confused

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welderwannabe
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by welderwannabe » Wed Aug 15, 2018 5:03 pm

Jb526 wrote:
Wed Aug 15, 2018 4:58 pm
As a current i401(k) and Roth i401(k) account holder at Vanguard holding most of my entire portfolio in those two accounts, I too am tempted to move them elsewhere due to the fact that Admiral shares are not available. Ever since opening the account, I have felt shortchanged due to the seemingly unavoidable higher expense ratios even though my balances are 10x the Admiral requirement. E-Trade and TD Ameritrade would definitely be my top choices for an alternative.
I moved mine to Fidelity from Vanguard. Vanguard's product was just too limited. Vanguard's brokerage and IRA products are fine...but their i401k is arbitrarily limited for reasons only clear to Vanguard.

Been with Fidelity for about 18 months now (for my i401k) and it has been great. Customer service is better, funds are fine.

My taxable account is still with Vanguard because their money markets and municipal bond funds are better. If Fidelity improves in those areas I would be gone with Vanguard entirely.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by JDDS » Wed Aug 15, 2018 5:56 pm

Spirit Rider wrote:
Mon Apr 09, 2018 3:37 pm
Nothing new there. This has always been true. Not even remotely close to the lowest fees for a one-participant 401k plan.

Fee Min Company TSM
0.030% $ 1 Schwab Total Stock Market Index Fund
0.035% $10,000 Fidelity Fidelity Total Market Index Fund Premium Class
0.150% $ 3,000 Vanguard Total Stock Market Index Fund Investor Shares

Vanguard also does not allow the following that the other two do:
  • IRA Rollover contributions. Can be very helpful for enabling an efficient Backdoor Roth.
  • Employee eligibility restrictions such a one year of service < 1000 hours/year and < age 21. A Vanguard, when you hire your children you can no longer have their individual 401k.
The minimums in Vanguard's i401(k) are waved for funds with minimums under $10k. (The website did not know this at least back in 2014, but you can add funds during the initial paperwork or by calling them.)

John Laurens
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by John Laurens » Wed Aug 15, 2018 6:14 pm

socal777 wrote:
Mon Apr 09, 2018 3:11 pm
I just got off the phone with a Vanguard advisor who walked me through thr process of setting up my Individual 401k for my LLC. She mentioned that the i401k is only allowed to invest in Investor Shares, not Admiral Shares. Still the lowest fees but surprised by this policy.
I don’t think “still the lowest fees” means what you think it means.

Regards,
John

mervinj7
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by mervinj7 » Wed Aug 15, 2018 6:23 pm

Jb526 wrote:
Wed Aug 15, 2018 4:58 pm
As a current i401(k) and Roth i401(k) account holder at Vanguard holding most of my entire portfolio in those two accounts, I too am tempted to move them elsewhere due to the fact that Admiral shares are not available. Ever since opening the account, I have felt shortchanged due to the seemingly unavoidable higher expense ratios even though my balances are 10x the Admiral requirement. E-Trade and TD Ameritrade would definitely be my top choices for an alternative.
You can search similar threads on this forum but you should seriously consider Fidelity as well. You can get their premium index funds with extremely low fees and no minimums. I wouldn't consider their new "no-fee" options without some more years of history (see recent thread). For me, one of the most important features of the Fidelity Solo 401k is that it accepts incoming IRA rollovers, which is crucial for doing Backdoor ROTH IRAs (in case you are interested).

https://www.fidelity.com/mutual-funds/i ... ndex-funds

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ruralavalon
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by ruralavalon » Wed Aug 15, 2018 6:56 pm

socal777 wrote:
Mon Apr 09, 2018 3:33 pm
plebeian wrote:
Mon Apr 09, 2018 3:24 pm
You can obtain lower fees by opening a self employed 401k at Fidelity and use Fidelity's Premium Class index funds which is comparable to Vanguard’s Admiral Shares:

https://www.fidelity.com/mutual-funds/f ... ndex-funds
Thanks for sharing this info about Fidelity. I'm so used ot everything defaulting to Vanguard in here I assumed they would also offer the lowest fees for an i401k. Someone elso mentioned Schwab's i401k program allowing me to roll my SEP into the i401k. Wondering if Fidelity would allow that as well? And would Schwab's fees be competitive with Fidelity on this?

What Fidelity funds are the most similar to VTSAX and VBTLX?
However, at Fidelity and Schwab you cannot make Roth contributions to an individual (solo) 401k.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Spirit Rider
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by Spirit Rider » Wed Aug 15, 2018 6:57 pm

John Laurens wrote:
Wed Aug 15, 2018 6:14 pm
socal777 wrote:
Mon Apr 09, 2018 3:11 pm
I just got off the phone with a Vanguard advisor who walked me through thr process of setting up my Individual 401k for my LLC. She mentioned that the i401k is only allowed to invest in Investor Shares, not Admiral Shares. Still the lowest fees but surprised by this policy.
I don’t think “still the lowest fees” means what you think it means.
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) 0.04% ER, has a small 0.0035% net return advantage over Fidelity® Total Market Index Fund all classes 0.015%.

So dicounting the new 0% Fidelity funds, because they are too new with a proprietary index.

You could arguably claim that VTSAX has a tiny advantage over the equivalent Fidelity funds. However, not even remotely the lowest fees in a one-participant 401k. You are effectively paying almost a 0.10% more ER.

John Laurens
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by John Laurens » Wed Aug 15, 2018 8:01 pm

Spirit Rider wrote:
Wed Aug 15, 2018 6:57 pm
John Laurens wrote:
Wed Aug 15, 2018 6:14 pm
socal777 wrote:
Mon Apr 09, 2018 3:11 pm
I just got off the phone with a Vanguard advisor who walked me through thr process of setting up my Individual 401k for my LLC. She mentioned that the i401k is only allowed to invest in Investor Shares, not Admiral Shares. Still the lowest fees but surprised by this policy.
I don’t think “still the lowest fees” means what you think it means.
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) 0.04% ER, has a small 0.0035% net return advantage over Fidelity® Total Market Index Fund all classes 0.015%.

So dicounting the new 0% Fidelity funds, because they are too new with a proprietary index.

You could arguably claim that VTSAX has a tiny advantage over the equivalent Fidelity funds. However, not even remotely the lowest fees in a one-participant 401k. You are effectively paying almost a 0.10% more ER.
Huh? Thought the topic was vanguard i401k? For all intents and purposes VTSAX doesn’t even exist at vanguard.

Regards,
John

Spirit Rider
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by Spirit Rider » Wed Aug 15, 2018 8:31 pm

John Laurens wrote:
Wed Aug 15, 2018 8:01 pm
Spirit Rider wrote:
Wed Aug 15, 2018 6:57 pm
You could arguably claim that VTSAX has a tiny advantage over the equivalent Fidelity funds. However, not even remotely the lowest fees in a one-participant 401k. You are effectively paying almost a 0.10% more ER.
Huh? Thought the topic was vanguard i401k? For all intents and purposes VTSAX doesn’t even exist at vanguard.
Let me help you with that.

VTSAX net return is 0.0035% > the Fidelity Total Stock Market net return available in their SE401k. VTSMX ER from i401k = VTSAX ER + 0.10%.

Therefore, Fidelity SE401k TSM net return is 0.10% - 0.0035% = 0.O965% > Vanguard i401k TSM net return.

harvestbook
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by harvestbook » Wed Aug 15, 2018 8:36 pm

I did my i401K at Vanguard because everything else was there, so it was familiar and convenient even with the lack of admiral funds. Today I would probably start with Fidelity but not really motivated to switch it right now. I just use the Lifestrategy Growth fund and ignore it, so in a way it simplified things so I'm not tempted to slice and dice.
I'm not smart enough to know, and I can't afford to guess.

John Laurens
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by John Laurens » Wed Aug 15, 2018 8:53 pm

Spirit Rider wrote:
Wed Aug 15, 2018 8:31 pm
John Laurens wrote:
Wed Aug 15, 2018 8:01 pm
Spirit Rider wrote:
Wed Aug 15, 2018 6:57 pm
You could arguably claim that VTSAX has a tiny advantage over the equivalent Fidelity funds. However, not even remotely the lowest fees in a one-participant 401k. You are effectively paying almost a 0.10% more ER.
Huh? Thought the topic was vanguard i401k? For all intents and purposes VTSAX doesn’t even exist at vanguard.
Let me help you with that.

VTSAX net return is 0.0035% > the Fidelity Total Stock Market net return available in their SE401k. VTSMX ER from i401k = VTSAX ER + 0.10%.

Therefore, Fidelity SE401k TSM net return is 0.10% - 0.0035% = 0.O965% > Vanguard i401k TSM net return.
I know all of that.

I guess things are getting lost with the written word. VTSAX doesn’t exist within the i401k. The total us stock market investor shares at vanguard are nearly 10 times as expensive as fidelity’s US total market index. 14bp vs 1.5. And as you rightly point out taking returns and ER into consideration, the Fidelity TSM nets an extra 9.65 bp per year.

Hence, I told the OP that his statement of “still the lowest fees” was incorrect as it relates to the vanguard i401k.

Regards,
John

Spirit Rider
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by Spirit Rider » Wed Aug 15, 2018 9:08 pm

If you knew all that, what's your point. I never stated VTSAX existed in a Vanguard i401k.

I was using it for a math exercise to explain the basis of the difference between comparative investments in a Vanguard i401k and a Fidelity SE401k

What was lost, was your ability to slow down and actually read and comprehend the point of my post. Then you would have understood that I was actually supporting your post

John Laurens
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by John Laurens » Wed Aug 15, 2018 9:15 pm

My initial response was to the OP. That is why I included his or her post in my post. I pointed out that “still the lowest fees” was incorrect using a movie quote from The Princess Bride. I never directed anything towards you initially.

Regards,
John

JDDS
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by JDDS » Wed Aug 15, 2018 11:52 pm

harvestbook wrote:
Wed Aug 15, 2018 8:36 pm
I did my i401K at Vanguard because everything else was there, so it was familiar and convenient even with the lack of admiral funds. Today I would probably start with Fidelity but not really motivated to switch it right now. I just use the Lifestrategy Growth fund and ignore it, so in a way it simplified things so I'm not tempted to slice and dice.
I did likewise for the same reason, and would probably do Fidelity if I was starting today.

I have two traditional-style accounts, including the i401(k), the second has admiral shares. I favor the funds that have a smaller difference in expense ratios between admiral and investor classes in the i401(k). Practically this means I put international in the i401(k) because there is a 6bp difference, whereas TSM has a 10bp difference. I also use an actively managed bond fund for which I do not meet the $50k minimum for admiral shares, so that goes in the i401(k) too. Then I hold my nose and buy TSM to fill out my asset allocation. I'm paying a bit over $100 per year extra because there's no admiral shares. That's not enough to overcome the friction of the work to do the move. I would be better served negotiating my cable internet bill, which I think I'm overpaying monthly by $20.

Four or five years ago when I was deciding, Fidelity's indexed international offering was not as 'total' as Vanguards, and I have a preference for mutual funds. Fidelity fixed that. With the expense ratio reductions, the Fidelity option has clearly pulled even further ahead. I guess a few years ago I had hoped Vanguard would feel some desire to make their i401(k) offering more competitive. As an example I still get snail mailed prospectous, reports, quarterly statements, etc. I have not found a way to turn it off.

I had also hoped that the investor share class expense ratios would more quickly approach admiral levels. Since Vanguard was funneling the target retirement funds assets there I had hoped there would be enough growth to justify closing the gap. Instead Vanguard started creating even more share classes for large accounts, which for single funds seemed like an okay move. When they created the institutional series of retirement funds though, they seemingly cherry picked which share classes to invest in to get the blended expense ratio to match the marketing goal. On some level I think their hands are tied because of how they have agreed to operate their funds of funds, but it puts them in the business of picking which share classes get more assets under management which feeds into future expense ratio calculations--the purest in me does not want them making those calls.

Don't get me wrong though, I'm still a Vanguard fan.

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spdoublebass
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by spdoublebass » Thu Aug 16, 2018 9:53 am

Jb526 wrote:
Wed Aug 15, 2018 4:58 pm
As a current i401(k) and Roth i401(k) account holder at Vanguard holding most of my entire portfolio in those two accounts, I too am tempted to move them elsewhere due to the fact that Admiral shares are not available. Ever since opening the account, I have felt shortchanged due to the seemingly unavoidable higher expense ratios even though my balances are 10x the Admiral requirement. E-Trade and TD Ameritrade would definitely be my top choices for an alternative.

However, upon further investigation today, just comparing my current i401(k) portfolio at Vanguard to what I see as being the closest equivalent of the same portfolio through the no-transaction-fee ETFs available at E-Trade, the differences in return seem pretty small.... and some returns are even better at Vanguard, while still being forced to remain in their Investor shares.

Image

Although I consider myself just a novice to slightly moderately experienced investor, these are the concerns that cross my mind:

1. Are the above differences in return significant enough to warrant opening (or transferring from Vanguard) an i401(k) at a different broker (in this case, E-Trade)?

2. Is it better to leave the i401(k) at Vanguard, where loans are not allowed to be taken against the account, so it eliminates that temptation?

3. Is E-Trade worth the inconvenience of having to repeatedly initiate a cash contribution into the i401(k), then wait for the funds to appear in the account before finally purchasing the ETFs in yet another separate transaction (as opposed to Vanguard, where the cash contribution and the selection of funds for purchase are done in one single transaction)?

4. Does the Vanguard i401(k)'s limitation to mutual funds and elimination of ETFs discourage frequent, unnecessary trading within the account?

5. Should one be worried about certain ETFs being removed from E-Trade's "no-transaction-fee" list?

6. Is it possible that Vanguard's expense ratios on Investor shares will go lower, or that Admiral shares will at some point be available within the i401(k)?

Perhaps I'm not taking something else into consideration that I should be. Or maybe it's not appropriate to compare 10-year returns like I have above. And, of course, the scenario would not be the same if I was to use a different portfolio as an example. But Vanguard's i401(k) may not be as bad as it would seem. :confused
Just tossing this out there....

Yes the ER's may be an issue for some, but my main concern is the $20 per fund fee. You are charged $20 for each fund you invest in until you reach $50,000 (Voyager Status).

So for your fund comparison, if you went with all 5 funds and were not at Voyager status, you'd be paying the higher ER plus an extra $100 in fees.

What I can't find on their website is does this mean $50K across all of your accounts? or $50K in your I401k.

I went with Vanguard, but my I401K is not a major part of my portfolio. I do personally find the $20 fee annoying, more so than the lack of Admiral shares.
I'm trying to think, but nothing happens

JDDS
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Re: For i401k, Vanguard does not allow investment into Admiral Shares

Post by JDDS » Thu Aug 16, 2018 4:50 pm

spdoublebass wrote:
Thu Aug 16, 2018 9:53 am
Jb526 wrote:
Wed Aug 15, 2018 4:58 pm
As a current i401(k) and Roth i401(k) account holder at Vanguard holding most of my entire portfolio in those two accounts, I too am tempted to move them elsewhere due to the fact that Admiral shares are not available. Ever since opening the account, I have felt shortchanged due to the seemingly unavoidable higher expense ratios even though my balances are 10x the Admiral requirement. E-Trade and TD Ameritrade would definitely be my top choices for an alternative.

However, upon further investigation today, just comparing my current i401(k) portfolio at Vanguard to what I see as being the closest equivalent of the same portfolio through the no-transaction-fee ETFs available at E-Trade, the differences in return seem pretty small.... and some returns are even better at Vanguard, while still being forced to remain in their Investor shares.

Image

Although I consider myself just a novice to slightly moderately experienced investor, these are the concerns that cross my mind:

1. Are the above differences in return significant enough to warrant opening (or transferring from Vanguard) an i401(k) at a different broker (in this case, E-Trade)?

2. Is it better to leave the i401(k) at Vanguard, where loans are not allowed to be taken against the account, so it eliminates that temptation?

3. Is E-Trade worth the inconvenience of having to repeatedly initiate a cash contribution into the i401(k), then wait for the funds to appear in the account before finally purchasing the ETFs in yet another separate transaction (as opposed to Vanguard, where the cash contribution and the selection of funds for purchase are done in one single transaction)?

4. Does the Vanguard i401(k)'s limitation to mutual funds and elimination of ETFs discourage frequent, unnecessary trading within the account?

5. Should one be worried about certain ETFs being removed from E-Trade's "no-transaction-fee" list?

6. Is it possible that Vanguard's expense ratios on Investor shares will go lower, or that Admiral shares will at some point be available within the i401(k)?

Perhaps I'm not taking something else into consideration that I should be. Or maybe it's not appropriate to compare 10-year returns like I have above. And, of course, the scenario would not be the same if I was to use a different portfolio as an example. But Vanguard's i401(k) may not be as bad as it would seem. :confused
Just tossing this out there....

Yes the ER's may be an issue for some, but my main concern is the $20 per fund fee. You are charged $20 for each fund you invest in until you reach $50,000 (Voyager Status).

So for your fund comparison, if you went with all 5 funds and were not at Voyager status, you'd be paying the higher ER plus an extra $100 in fees.

What I can't find on their website is does this mean $50K across all of your accounts? or $50K in your I401k.

I went with Vanguard, but my I401K is not a major part of my portfolio. I do personally find the $20 fee annoying, more so than the lack of Admiral shares.
Short answer, most account balances in a Vanguard product qualify, long answer is at https://personal.vanguard.com/us/whatwe ... ces/seehow

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