Kaiser Permanente 401(k) fee question

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texasdiver
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Location: Vancouver WA

Kaiser Permanente 401(k) fee question

Post by texasdiver »

Just curious if anyone here is in the Kaiser 401(k) plan with Fidelity. And can explain the fee structure.

My wife is reaching her 1-year anniversary and will soon be eligible to join the 401(k) plan. She got a big package of 401(k) plan material in the mail which we have sorted through and read. Cannot find any mention of fees anywhere in the plan documents (other than the fees in the underlying mutual funds). Emailed the HR rep who couldn't answer the question about whether there are additional fees but she sent more documents that didn't answer the question either. Also referred us to the Kaiser site on Fidelity for more information but one cannot actually get onto that web site until one has established an account.

It doesn't really make a difference in whether she will participate. Obviously any reasonable plan is better than nothing. But knowing the exact fee structure does make a difference in the decision to roll over some substantial 403(b) balances from previous employer.

It seems as if there are no fees in the Kaiser 401(k) plan other than the underlying mutual fund fees. But we cannot actually confirm this in writing anywhere. Anyone here know?

Don't want to roll 6-figure account balances into the plan on the assumption of zero fees and then find out later we were wrong and have the money stuck there until she retires.
mhalley
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Joined: Tue Nov 20, 2007 6:02 am

Re: Kaiser Permanente 401(k) fee question

Post by mhalley »

You might check out brightscope
https://www.brightscope.com/401k-rating ... ment-Plan/
The fees should be listed in the summary plan document. If you did not receive one, call hr to ask for one. It will be available online once you get a login.
https://www.dol.gov/sites/default/files ... ployee.pdf
SoonerD
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Re: Kaiser Permanente 401(k) fee question

Post by SoonerD »

You can ask HR or the Fidelity rep for a copy of the 404(a)(5) aka "participant fee disclosure" document. They have to provide that to you. It will disclose all fees that participants may incur. If there is no record keeping or administrative fee listed then those fees are paid by either the plan sponsor (from corporate assets) or by the fund company's revenue-sharing paid to the record keeper. The other possible way to have no record keeping or admin fees paid by participants is if the plan is so rich to the record keeper (Fidelity) that Fidelity provides record keeping for free. This is done when the investment line up is heavy with proprietary funds (Fidelity funds in this case) and the firm makes enough off the funds that they can do the record keeping for free. This last scenario is a bit of a no-no but may still occur.

If there is revenue sharing from the funds then they are typically used in one of three ways

1) used to pay some or all of the plan expenses such as record keeping fees, auditor fees, adviser fees, legal fees, etc.
2) refunded back to the participants (in one of several ways) which essentially looks like a fee credit to the recipient.
livesoft
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Re: Kaiser Permanente 401(k) fee question

Post by livesoft »

FWIW, my old employer's 401(k) plan run by Fidelity had no fees to participants other than the fund expense ratios. And plenty of index funds, too.

Besides Brightscope, one can also find and read the plan's Form 5500 which will have some costs paid by the plan.
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Topic Author
texasdiver
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Re: Kaiser Permanente 401(k) fee question

Post by texasdiver »

Just a follow-up.

We finally managed to obtain all the plan documents online after enrolling her in the 401k plan.

Turns out there are no management or administrative fees other than the underlying fund fees. Even though it is managed by Fidelity there are a range of other fund options including Vanguard, American Funds, Dodge & Cox, etc. Really quite random list of funds. In any event, there are three Vanguard equity options: Small-Cap Index (VSCIX), Mid-Cap Index (VMCIX), and Total Stock Market Investor Shares (VITSX) so we will just dump all her new contributions into VITSX which has the lowest ER at 0.035% and use our other accounts to rebalance as necessary down the road.

So it seems this is a pretty good 401k compared to many out there. We have a couple of Vanguard domestic equity fund choices and no fees. Although one has to use the Fidelity or Harbor managed funds to get international exposure. Bond choices are limited to PIMCO and Loomis. And the target retirement funds are the Fidelity Freedom Funds. So it isn't perfect for creating a simple 3-fund all-in-one portfolio. But it is a reasonable place for a portion of our total holdings.

It appears the reason the Kaiser plan doesn't have a higher rating on brightscope is due to the poor employer match, not the fees or fund choices. But they do most of their employer retirement contributions through a separate money purchase plan outside the 401k so that isn't surprising.
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happysteward
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Re: Kaiser Permanente 401(k) fee question

Post by happysteward »

In an effort to understand the two basic expense structures for 401(K) plans I have attached the following drawing. It helped me a lot and I I hope it helps your understanding as to how the various players in every 401(K) get paid. The three players are the recordkeeper, the financial advisor and the investments themselves. Believe me they all get paid one way or the other :happy


Image[/quote]
"How much money is enough?", John Rockefeller responded, "...just a little bit more."
PFInterest
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Re: Kaiser Permanente 401(k) fee question

Post by PFInterest »

You might want to mention which Kaiser. This is not SoCal.
Topic Author
texasdiver
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Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: Kaiser Permanente 401(k) fee question

Post by texasdiver »

PFInterest wrote:You might want to mention which Kaiser. This is not SoCal.
Northwest Permanente (Oregon and Washington)
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Voltron
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Re: Kaiser Permanente 401(k) fee question

Post by Voltron »

Interesting. Southern California for the physicians is run by Schwab.
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