Vanguard's Admiral fees when in a Company's 401K plan
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Vanguard's Admiral fees when in a Company's 401K plan
Hi,
My company offers some Vanguard (Total Stock Market Index) funds in our 401K. I currently have more than the $10K for Admiral reduction in expenses. I don't believe I'm getting a rebate or anything with my account.
Anyone else fall into the same boat? Is there anything I can do ?
I know, I should be grateful that my company has selected Vanguard and has good expenses. I'm just looking for what Vanguard would charge me if I rolled this out of my corp 401K.
Thanks,
Craig
My company offers some Vanguard (Total Stock Market Index) funds in our 401K. I currently have more than the $10K for Admiral reduction in expenses. I don't believe I'm getting a rebate or anything with my account.
Anyone else fall into the same boat? Is there anything I can do ?
I know, I should be grateful that my company has selected Vanguard and has good expenses. I'm just looking for what Vanguard would charge me if I rolled this out of my corp 401K.
Thanks,
Craig
Hi Craig. Welcome to the forum!
Fees within a 401k are negotiated. They can be higher or lower than what is offered outside a plan. I don't recall ever seeing a 401 plan that had different fees for different amounts of money.
Don't be concerned if you could get the fund cheaper outside your plan. It is a no-brainer to use your plan most of the time, especially if VG funds are offered.
Fees within a 401k are negotiated. They can be higher or lower than what is offered outside a plan. I don't recall ever seeing a 401 plan that had different fees for different amounts of money.
Don't be concerned if you could get the fund cheaper outside your plan. It is a no-brainer to use your plan most of the time, especially if VG funds are offered.
Link to Asking Portfolio Questions
Here is the array of TSM funds at Vanguard:
Total Stock Mkt Idx Inv - VTSMX $3,000 0.18%
Total Stock Mkt Idx Admiral VTSAX $10,000 0.07%
Total Stock Mkt Ix Signal - VTSSX Note 0.07%
Total Stock Mkt Idx Inst - VITSX $5,000,000 0.06%
Inst Ttl Stk Mkt Idx Inst - VITNX $100,000,000 0.045%
Inst Ttl Stk Mkt Idx Ist Plus - VITPX $200,000,000 0.025%
Total Stock Market ETF - VTI Note 0.07%
Those $ values are the minimums, which in a 401K would apply to the plan, not to the investor.
If your 401K is offering only VTSMX, there might be some issue about how your plan is set up. Note that brokerages other than Vanguard do not handle Admiral shares of Vanguard index funds. A 401k should have access to institutional funds.
One can refer to:
https://institutional.vanguard.com/VGAp ... nvestments
Total Stock Mkt Idx Inv - VTSMX $3,000 0.18%
Total Stock Mkt Idx Admiral VTSAX $10,000 0.07%
Total Stock Mkt Ix Signal - VTSSX Note 0.07%
Total Stock Mkt Idx Inst - VITSX $5,000,000 0.06%
Inst Ttl Stk Mkt Idx Inst - VITNX $100,000,000 0.045%
Inst Ttl Stk Mkt Idx Ist Plus - VITPX $200,000,000 0.025%
Total Stock Market ETF - VTI Note 0.07%
Those $ values are the minimums, which in a 401K would apply to the plan, not to the investor.
If your 401K is offering only VTSMX, there might be some issue about how your plan is set up. Note that brokerages other than Vanguard do not handle Admiral shares of Vanguard index funds. A 401k should have access to institutional funds.
One can refer to:
https://institutional.vanguard.com/VGAp ... nvestments
Re: Vanguard's Admiral fees when in a Company's 401K plan
Individually, there's nothing you can do directly, but you can advocate with your company's HR department and 401k plan administration liaison to see if they can negotiate for access to Admiral or Institutional share classes, across the board. (dbr, retirement plans with third-party administrators can get access to Admiral-class shares. Wisconsin's 457 has both an institutional and an Admiral-class Vanguard offering in the plan.)curtin1060 wrote:Anyone else fall into the same boat? Is there anything I can do ?
Total plan assets play into this negotiation, so if your company is small there may not be any real hope.
Re: Vanguard's Admiral fees when in a Company's 401K plan
Thanks for the update. My info probably is for retail investors who can buy Vanguard non-index Admiral funds at some brokers but not index Admiral.jcompton wrote:Individually, there's nothing you can do directly, but you can advocate with your company's HR department and 401k plan administration liaison to see if they can negotiate for access to Admiral or Institutional share classes, across the board. (dbr, retirement plans with third-party administrators can get access to Admiral-class shares. Wisconsin's 457 has both an institutional and an Admiral-class Vanguard offering in the plan.)curtin1060 wrote:Anyone else fall into the same boat? Is there anything I can do ?
Total plan assets play into this negotiation, so if your company is small there may not be any real hope.
One would certainly hope any third party administrator can get the lowest cost funds except, as you say, when the plan is too small.
Usually they setup a separate "trust" or fund in a 401k,
that may ultimately invest in the same funds you know, but there is a wrapper with it's own fee structure, that invests in the underlying funds.
This is how your employer can offer a plan with little cost to them, by allow the fund advisor to make a bit more and perform the extra record keeping required by retirement plans vs regular fund shareholders.
that may ultimately invest in the same funds you know, but there is a wrapper with it's own fee structure, that invests in the underlying funds.
This is how your employer can offer a plan with little cost to them, by allow the fund advisor to make a bit more and perform the extra record keeping required by retirement plans vs regular fund shareholders.
“It's tough to make predictions, especially about the future.” ― Yogi Berra
Re: Vanguard's Admiral fees when in a Company's 401K plan
Deleted by author
Last edited by ncaraway on Mon Sep 08, 2014 7:41 am, edited 1 time in total.
I don't believe that "usually" is the correct term. Sometimes, what you describe is in fact the case. However, sometimes it is not. I had one employer that had the "trust" arrangement and they later changed to straight mutual funds that you could look up in the newspaper. The employer was a small company.blevine wrote:Usually they setup a separate "trust" or fund in a 401k,
that may ultimately invest in the same funds you know, but there is a wrapper with it's own fee structure, that invests in the underlying funds.
Jeff
See this thread:
http://www.bogleheads.org/forum/viewtopic.php?t=62525
Basically, if your company collectively meets the admiral/signal/institutional requirements, then the 401k administrator can request the upgrade.
http://www.bogleheads.org/forum/viewtopic.php?t=62525
Basically, if your company collectively meets the admiral/signal/institutional requirements, then the 401k administrator can request the upgrade.
I have money in The Total Bond Fund and the TIPS fund in a self-directed 401K.
I called the trustee, Hewitt, to see if they would convert them to Admiral shares. Hewitt said I had to sell the funds first (costing me $30 per fund), then buy the admiral shares (at 30$ per fund again).
The payback time is only a few months, so I guess I will do it. Irritates me that I have to pay $120 to convert to admiral shares.
I called the trustee, Hewitt, to see if they would convert them to Admiral shares. Hewitt said I had to sell the funds first (costing me $30 per fund), then buy the admiral shares (at 30$ per fund again).
The payback time is only a few months, so I guess I will do it. Irritates me that I have to pay $120 to convert to admiral shares.
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. – Warren Buffett
I had kind of the same issue in my 401(k) that is administered by Vanguard. Our office manager asks every six months or so if any of us have questions/issues we'd like to submit anonymously to senior management or HR. I had her ask why our 401(k) didn't have admiral, signal, or institutional shares of the Vanguard funds when our plan had millions of dollars in those funds.
She/I never got an answer, but miraculously, a year later we got some signal shares in the 401(k). My guess was that the 401(k) plan committee didn't know about the cheaper shares
She/I never got an answer, but miraculously, a year later we got some signal shares in the 401(k). My guess was that the 401(k) plan committee didn't know about the cheaper shares
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair
My understanding was that was true of funds that are not index funds.thepommel wrote:I'm not sure that is correct; I've seen brokerages with Mutual Fund Marketplaces that allow Admiral funds.dbr wrote:Note that brokerages other than Vanguard do not handle Admiral shares of Vanguard index funds.
Regards,
Examples of Vanguard funds that are not index funds are most any Treasury fund, for example, but does not include such things as Total Bond Index or Total Stock Index.
It is always helpful to find routes to purchase at the Admiral level for cases here or there where holding the funds at Vanguard is not possible. An example is in directed brokerage options in 401K plans.