VOYA 401-K Rant

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Topic Author
avburns
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Joined: Mon Aug 04, 2014 1:20 pm

VOYA 401-K Rant

Post by avburns »

I'm about to turn 50 (Jan. 16) and have $189,922.54 in a VOYA 401-K. This isn't all my money just what's in the 401-K. Anyway, around Oct. of last year my 401-K was transferred from American Funds to VOYA. I'm a $12 an hour security guard and had my money invested equally in RWIBX, American Funds Capital World Gr&Inc R2 and RNPBX, American Funds New Perspective R2 primarily because I wanted to go heavy on equities and wanted the fund managers to have the whole world to invest in. Both funds had an expense ratio over 1.50% which I obviously wasn't happy with. There were no indexed options.
Anyway, when the news came that we were moving to VOYA, I was hoping for lower expense ratios (no such luck) but I did get some indexed options. I put everything in FXAIX, Fidelity® 500 Index which under VOYA somehow has a 1.26% expense ratio.
Okay, here's where things get weird. Even though the documentation lists FXAIX as the fund I'm invested in, VOYA seems to be using some proprietary variation of their own. Morningstar shows FXAIX trading at 132.62; my VOYA version trades at $14.23. FXAIX paid a dividend in Dec.; VOYA didn't. I have never had this level of murkiness where the only way I can tell how I'm doing is by going to the website/app. When I called VOYA the idea of not being able to look up my investment on Morningstar and having to go through the website/app seemed "normal". Ditto for the dividend, which the rep had no clue about, after repeatedly putting me on hold to look for the non-answer.
Has anyone else experienced this? I stopped my contributions and plan on funding an IRA and shifting what would go into the 401-K into a taxable account but with this LACK of transparency I really don't want VOYA managing my money. I don't plan on quitting anytime soon, so is my only option an in-service rollover when I'm old enough?
lakpr
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Re: VOYA 401-K Rant

Post by lakpr »

This is common in 401k plans, as the investments can be held in Collective Investment Trusts The dividends that the underlying fund distributes are used to buy additional units in the trust, without passing those dividends on to individual investors.

I do feel sorry about the 1.26% ER, but given that 401k plans undergo extraordinary scrutiny, be assured that you are not being cheated out of the money. You gain the market returns in terms of increased share prices within the CITs.
Topic Author
avburns
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Joined: Mon Aug 04, 2014 1:20 pm

Re: VOYA 401-K Rant

Post by avburns »

Thanks for the response. I've never heard about CIT's and never had an investment that I couldn't look up. I'm glad that what they're managing is "safe" but I prefer the transparency of ETF's (where the rest of my money is invested).
Cyanide123
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Re: VOYA 401-K Rant

Post by Cyanide123 »

avburns wrote: Mon Jan 11, 2021 4:28 am I'm about to turn 50 (Jan. 16) and have $189,922.54 in a VOYA 401-K. This isn't all my money just what's in the 401-K. Anyway, around Oct. of last year my 401-K was transferred from American Funds to VOYA. I'm a $12 an hour security guard and had my money invested equally in RWIBX, American Funds Capital World Gr&Inc R2 and RNPBX, American Funds New Perspective R2 primarily because I wanted to go heavy on equities and wanted the fund managers to have the whole world to invest in. Both funds had an expense ratio over 1.50% which I obviously wasn't happy with. There were no indexed options.
Anyway, when the news came that we were moving to VOYA, I was hoping for lower expense ratios (no such luck) but I did get some indexed options. I put everything in FXAIX, Fidelity® 500 Index which under VOYA somehow has a 1.26% expense ratio.
Okay, here's where things get weird. Even though the documentation lists FXAIX as the fund I'm invested in, VOYA seems to be using some proprietary variation of their own. Morningstar shows FXAIX trading at 132.62; my VOYA version trades at $14.23. FXAIX paid a dividend in Dec.; VOYA didn't. I have never had this level of murkiness where the only way I can tell how I'm doing is by going to the website/app. When I called VOYA the idea of not being able to look up my investment on Morningstar and having to go through the website/app seemed "normal". Ditto for the dividend, which the rep had no clue about, after repeatedly putting me on hold to look for the non-answer.
Has anyone else experienced this? I stopped my contributions and plan on funding an IRA and shifting what would go into the 401-K into a taxable account but with this LACK of transparency I really don't want VOYA managing my money. I don't plan on quitting anytime soon, so is my only option an in-service rollover when I'm old enough?
I hate my wife's voya retirement account, a lot of high ER funds. Though i was able to make a 3 fund portfolio with average ER of 0.3 roughly.
exodusNH
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Re: VOYA 401-K Rant

Post by exodusNH »

avburns wrote: Mon Jan 11, 2021 4:28 am Anyway, when the news came that we were moving to VOYA, I was hoping for lower expense ratios (no such luck) but I did get some indexed options. I put everything in FXAIX, Fidelity® 500 Index which under VOYA somehow has a 1.26% expense ratio.
This could be due to your company is not paying the 401K company directly for their services. They're rolling those management fees into the ER, which the 401K administrator then gets a part of to cover their services. (There's a lot of regulation and paperwork for 401K plans. I'm on the 401K committee at my company.)

My company had a similar set up until recently. We finally switched to the transparent costs model, which is more fair, but the extra fee can confuse people. You were always paying it, but now it is being called out.
Topic Author
avburns
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Re: VOYA 401-K Rant

Post by avburns »

That's a possibility. Some of the literature I revisited had the "TR" among the funds benchmarks, so I'm thinking lakpr's CIT's comments are accurate. I didn't know how widespread CIT's were but the lack of transparency isn't something I'm a fan of. Also, some of the articles I've read after starting this thread noted one reason for CIT's are lower fees. Well, I'm not getting the lower fees (probably because of what exodusNH said), so I'll stick with the ETFs I'm familiar with; getting the lower fees and the transparency I desire.
Thanks for the responses and introducing me to CIT's. I'm not happy with the decisions of my employer but, at least, I learned something new, I guess.
cavman22
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Re: VOYA 401-K Rant

Post by cavman22 »

exodusNH wrote: Mon Jan 11, 2021 10:22 am
avburns wrote: Mon Jan 11, 2021 4:28 am Anyway, when the news came that we were moving to VOYA, I was hoping for lower expense ratios (no such luck) but I did get some indexed options. I put everything in FXAIX, Fidelity® 500 Index which under VOYA somehow has a 1.26% expense ratio.
This could be due to your company is not paying the 401K company directly for their services. They're rolling those management fees into the ER, which the 401K administrator then gets a part of to cover their services. (There's a lot of regulation and paperwork for 401K plans. I'm on the 401K committee at my company.)

My company had a similar set up until recently. We finally switched to the transparent costs model, which is more fair, but the extra fee can confuse people. You were always paying it, but now it is being called out.

This.... my employer uses Voya and we have several index funds that are very low cost. I actually really like voya.

You may petition the Retirement plan managers in your organizations HR department for a lower cost plan
HomeStretch
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Re: VOYA 401-K Rant

Post by HomeStretch »

Do you receive a 401k matching/profit-sharing contribution from your employer? If so, that lessens the financial sting of a high-ER 401k plan. If not, consider contributing the max to a traditional or Roth IRA at a low-cost provider before contributing to the 401k.
Topic Author
avburns
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Re: VOYA 401-K Rant

Post by avburns »

Unfortunately, I no longer receive a match.
lakpr
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Re: VOYA 401-K Rant

Post by lakpr »

If you are earning $12 per hour, and if you can save $6000 of those earnings in a Roth IRA, you are really saving 25% of your pay. Surely with these high expenses, the 401k plan is of no use to you. You are MUCH better off with focusing on maximizing the IRA.

Hate to sound like class-ist, but the 401k plan will only be necessary if you are in the 22% tax bracket -- or if you are earning $25 per hour or north of it. Skip the 401k and save your money. Really. and Earnestly. Maximizing the Roth IRA should be your holy grail.

Whatever you did contribute so far, roll it all into FXAIX with the 1.26% expense ratio.
lazynovice
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Re: VOYA 401-K Rant

Post by lazynovice »

Is there a brokerage window option? If so, do they charge a fee on that per transaction? If so, you could purchase a lower ER fund his that window?

At your income a Roth is usually better than a 401(k) if you don’t get a match but you should run the numbers to make sure you do not price yourself out of any tax credits or subsidies.
MA405
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Re: VOYA 401-K Rant

Post by MA405 »

I had a similar situation with a 529 plan where I invested in one of the Primecap Odyssey funds.
Same thing, the price on plan's website did not match the ticker price, no increases in quantity of shares after dividend distributions, etc. I really did not like that non-transparent accounting either.

What made it worse for me, the first initial contribution was invested at the correct ticker price, then after a while the prices did not match anymore, subsequent contributions were at plan's prices. So they must have somehow kept separate share pricing for every different investor, and I just couldn't help it but doubt the accuracy of their accounting. Weird scheme, I am pretty sure that has to do with differences in ER under the plan.
Topic Author
avburns
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Re: VOYA 401-K Rant

Post by avburns »

lazynovice, no brokerage window. I thought about the Roth vs traditional, I'll probably opt for the traditional to ensure I'm maximizing my ACA subsidies, Saver's Credit, etc. Plus, I live in Tennessee, so with the repeal of the Hall Income Tax, it's pretty much a wash tax-wise.
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Wiggums
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Re: VOYA 401-K Rant

Post by Wiggums »

lakpr wrote: Mon Jan 11, 2021 4:36 am This is common in 401k plans, as the investments can be held in Collective Investment Trusts The dividends that the underlying fund distributes are used to buy additional units in the trust, without passing those dividends on to individual investors.

I do feel sorry about the 1.26% ER, but given that 401k plans undergo extraordinary scrutiny, be assured that you are not being cheated out of the money. You gain the market returns in terms of increased share prices within the CITs.
I agree with this response and I share your annoyance with the high expense ratio and your Lack of ability to look up this fund outside of whatever information voya provides.
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beyou
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Re: VOYA 401-K Rant

Post by beyou »

avburns wrote: Mon Jan 11, 2021 4:53 pm lazynovice, no brokerage window. I thought about the Roth vs traditional, I'll probably opt for the traditional to ensure I'm maximizing my ACA subsidies, Saver's Credit, etc. Plus, I live in Tennessee, so with the repeal of the Hall Income Tax, it's pretty much a wash tax-wise.
These issues are all up to your employer, not Voya. We use Voya but have a mutual fund window.
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Brianmcg321
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Re: VOYA 401-K Rant

Post by Brianmcg321 »

My wife had a Voya 401k and I couldn't get her out of it fast enough when her company changed to Fidelity. Extremely high fees, like you saw for basic index funds. Fortunately she didn't have it for too long.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
Katietsu
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Re: VOYA 401-K Rant

Post by Katietsu »

avburns wrote: Mon Jan 11, 2021 4:53 pm lazynovice, no brokerage window. I thought about the Roth vs traditional, I'll probably opt for the traditional to ensure I'm maximizing my ACA subsidies, Saver's Credit, etc. Plus, I live in Tennessee, so with the repeal of the Hall Income Tax, it's pretty much a wash tax-wise.
With ACA subsidies and savers credit, it can be pretty hard to figure out the income to aim for. Do you do your own taxes? If so, I would do a dummy tax return. You try it with a traditional IRA contribution and then you delete the traditional and add a Roth contribution. You can even try 50/50.

Since you are 50 or over, you can contribute $7000 to an IRA.
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F150HD
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Re: VOYA 401-K Rant

Post by F150HD »

avburns wrote: Mon Jan 11, 2021 4:28 amVOYA seems to be using some proprietary variation of their own. Morningstar shows FXAIX trading at 132.62; my VOYA version trades at $14.23. FXAIX paid a dividend in Dec.; VOYA didn't. I have never had this level of murkiness where the only way I can tell how I'm doing is by going to the website/app. When I called VOYA the idea of not being able to look up my investment on Morningstar and having to go through the website/app seemed "normal".
Had similar work experience w/ them years back so moved my money to Fidelity, thankfully that was another option I had. Voya account was beyond confusing. Ditto on not being able to look up a simple fund on M*
Topic Author
avburns
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Re: VOYA 401-K Rant

Post by avburns »

Katietsu, I was just going to use this upcoming year as a trial case; I figured I could re-characterize if I didn't like the results. But your idea of a dummy tax return is a good one. I'll give it a shot. Thanks.
megabad
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Re: VOYA 401-K Rant

Post by megabad »

lakpr wrote: Mon Jan 11, 2021 4:29 pm If you are earning $12 per hour, and if you can save $6000 of those earnings in a Roth IRA, you are really saving 25% of your pay. Surely with these high expenses, the 401k plan is of no use to you. You are MUCH better off with focusing on maximizing the IRA.
+1. IRA likely better absent match. Actually, a taxable account may even be better than the 401k in this case. Of course, OP still has to deal with money currently in the not so good plan until he/she changes jobs.
z3r0c00l
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Re: VOYA 401-K Rant

Post by z3r0c00l »

We also have Voya for our 401K (was previously ING? State Street Global Alliance?) and I feel for you. 401K plans seems to always be a decade behind the times on ERs and investing options. But our Voya options are solid and ERs reasonable at around .2 - .4%. The crux of it is, it is your company that is at issue here not Voya since they probably are responsible for the bad investment options. Given the fact that they are offering you little more than minimum wage, one would hope they could throw you a bone and match 401K or offer better options. Is there a pension plan?
humblecoder
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Re: VOYA 401-K Rant

Post by humblecoder »

Voya's 401k options must be employer specific. My megacorp has its 401k through Voya and their options are excellent - as good or better than anything I could get on my own.
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F150HD
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Re: VOYA 401-K Rant

Post by F150HD »

at one point I recall a S&P index fund available (as I was leaving), it didn't have the ER the OP quoted.

not sure. Scroll down left column of PDF

https://voyaretirement.voya.com/static/ ... 570125.PDF
saintsfan342000
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Re: VOYA 401-K Rant

Post by saintsfan342000 »

These threads just make me angry. It makes no sense that 401Ks have to be these boutique packages hand-crafted for each employer...this model makes it too easy for the institution to rip off the employers and participants. Why can't 401Ks just be self-directed IRA-type accounts? You open up the the account wherever you want, give the account info to your employer. If you don't give them the info, they auto-enroll you by opening one up for you.
Already impartial now
megabad
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Re: VOYA 401-K Rant

Post by megabad »

saintsfan342000 wrote: Tue Jan 12, 2021 10:11 am These threads just make me angry. It makes no sense that 401Ks have to be these boutique packages hand-crafted for each employer...this model makes it too easy for the institution to rip off the employers and participants.
A logical reason for establishing the Collective Trusts is that the provider can easily shop management services and that makes the provider more efficient (at producing profit/savings for the provider). This efficiency does not necessarily have to be passed down to employees.
nolesrule
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Re: VOYA 401-K Rant

Post by nolesrule »

My wife's MegaCorp 401k used to be with Voya. They moved to Fidelity a few years ago. Same investment options. They use CITs that are basically closet index funds, the ERs are very low, and they match their benchmarks.

What you get in a 401k plan is what your employer is willing to pay for or what they get tricked into paying/not paying for because they don't know any better. Some employers are willing to pay the administrative costs, others push the costs onto the employees.Yet other plans fall somewhere in between. Some employers shop around to get the best deals on costs, others open a 401k plan with someone they know who charges an arm and a leg, but the company doesn't know any better.
gblack
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Re: VOYA 401-K Rant

Post by gblack »

I had the same murky experience with Voya 401k, but other posters have correctly pointed out the CIT thing. I had what I thought was a good Vanguard Target Date fund with a .15 expense ratio, but noticed fees being deducted from my account every so often. I did some digging and found out they also charged a "service fee" for .65 for administering the 401k. I assume this was negotiated between my employer and Voya, but the main point - I was really paying .8 ER, and not .15 as advertised. In case anyone needs something else to be mad about...
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