Workplace 401k Fees being added

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jbsmith05
Posts: 102
Joined: Fri Apr 01, 2016 2:01 pm

Workplace 401k Fees being added

Post by jbsmith05 » Thu Nov 08, 2018 4:28 pm

My workplace is changing the fee structure for the 401k to be paid by the participants rather than the offsets of the plan's investment options.

it's a percentage based on the value of your 401k, which for me will be thousands of dollars per year.

Any options around this - perhaps rolling the money out of the 401k once a year to an IRA (not sure if this is legal/allowed with out other fees/penalties.


Thanks in advance

jacksonm
Posts: 38
Joined: Tue Oct 16, 2018 11:48 am

Re: Workplace 401k Fees being added

Post by jacksonm » Thu Nov 08, 2018 4:41 pm

It would depend on your plan whether or not in-service rollovers are allowed and whether or not there are any fees associated.

The company I last worked for before I retired allowed withdrawals but only after age 59 1/2 and there was no fee. I took advantage of it on several occasions. They would simply cut me a check made out to Fidelity Investments FBO my name and and then I would mail it to Fidelity.

jbsmith05
Posts: 102
Joined: Fri Apr 01, 2016 2:01 pm

Re: Workplace 401k Fees being added

Post by jbsmith05 » Thu Nov 08, 2018 5:00 pm

jacksonm wrote:
Thu Nov 08, 2018 4:41 pm
It would depend on your plan whether or not in-service rollovers are allowed and whether or not there are any fees associated.

The company I last worked for before I retired allowed withdrawals but only after age 59 1/2 and there was no fee. I took advantage of it on several occasions. They would simply cut me a check made out to Fidelity Investments FBO my name and and then I would mail it to Fidelity.
This is what I was thinking, my plan is at Fido so wondering if i could do a roll to one of my IRAs there as well....of course i'm not close to 59 so there may not be many options. I'll have to talk to Fido and see what my plan allows.

sawhorse
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Re: Workplace 401k Fees being added

Post by sawhorse » Thu Nov 08, 2018 6:05 pm

One thing to consider with rolling it to an IRA is protection from lawsuits. 401ks are protected from lawsuits in all states whereas IRA protection depends on the state. For this reason we moved my husband's IRA into his 401k even though the fees are higher in the 401k.

jbsmith05
Posts: 102
Joined: Fri Apr 01, 2016 2:01 pm

Re: Workplace 401k Fees being added

Post by jbsmith05 » Fri Nov 09, 2018 9:26 am

Well, no option to do an in-service rollover with my existing plan...so I guess I'm just stuck paying the fees.

jsmoove123
Posts: 24
Joined: Sun Oct 22, 2017 12:01 am

Re: Workplace 401k Fees being added

Post by jsmoove123 » Fri Nov 09, 2018 1:09 pm

sawhorse wrote:
Thu Nov 08, 2018 6:05 pm
One thing to consider with rolling it to an IRA is protection from lawsuits. 401ks are protected from lawsuits in all states whereas IRA protection depends on the state. For this reason we moved my husband's IRA into his 401k even though the fees are higher in the 401k.
Does this actually confer these protections upon the rollover money? I thought I had read somewhere that the 401k plan labels the funds based on source (contribution vs rollover) and that only the contributions are protected.

Nate79
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Location: Delaware

Re: Workplace 401k Fees being added

Post by Nate79 » Fri Nov 09, 2018 1:25 pm

Sounds like you have zero options.

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bigROI
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Re: Workplace 401k Fees being added

Post by bigROI » Fri Nov 09, 2018 1:34 pm

I am not a lawyer but you may want to have one draft a letter regarding equitable fee management for the program. There has been litigation against institutions that have implemented changes without employee input, counsel or a committee. If it cost you a hundred or two not a huge but thousands is not a fair cost to you as a participant for the fees you actually incur to the program. I would make them aware and put them on notice that you may consider a suit recouping losses if they don't look at a fair fee implementation. Again I am not your lawyer so I am just offering an option on what I would do. You are not only losing thousands up front but the compounded earnings on that capital that makes it really bad.
A penny saved is much more then a penny earned when you consider the tax/SS/medicare cut.

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