Academy Advantage Partner Spotlight
To Lower Your 401(k) Fees, Raise Your 401(k) Understanding Are your 401(k) fees too high? If so, is there anything you can you do to lower them? The first thing to do when faced with these questions is to consider the acceptable fee ranges for most plans of your size. Plans under $1 million should have fees from 1.42 percent to 2.3 percent; plans over $1 million and up to $10 million: .87 percent to 1.62 percent. Now that you have a frame of reference for evaluating the sum total of your fees, it’s time to find out exactly what fees are included in your plan. (Hint: You can request a fee disclosure form from Academy Benefit Partners to assist you.) Does your 401(k) plan charge for any of the following services: record keeper fee; third-party administrator fee; custodian fee; advisor fee; fund cost fee; 3(38) manager fee (if applicable)? Once armed with the facts about your fees, you can consider what changes you may make to your plan. Follow up with questions to your plan provider. You also can reduce costs by changing your advisor or changing plans. But should you actually change plans? Is it worth the pain of change? First, consider the costs of changing plans. Some vendors will levy a fee to move to another provider, but don’t let that stop you from continuing your quest for reduced costs. Compare the cost of moving a plan to the excess cost of keeping it status quo. If your provider is overpriced, it may still be more economical to move the plan despite the penalty fee. Once your new, improved lower-fee 401(k) plan is established, don’t take it for granted. Employee education is the key to ensuring that your plan is used efficiently. Good plan advisors hold meetings for employees at least every six months to answer workers’ questions. Schedule regular reviews with your plan and vendors and you will help to secure your employees’ financial futures as well as protect yourself from fiduciary liability. This article was provided by The Payroll Company, an AAO-HNS Academy Advantage Partner. Contact Erika Young at 1-608-826-1111, via email at: erikay@payrollcompany.biz or www.academybenefitpartners.org to learn more.
To Lower Your 401(k) Fees, Raise Your 401(k) Understanding
Are your 401(k) fees too high? If so, is there anything you can you do to lower them? The first thing to do when faced with these questions is to consider the acceptable fee ranges for most plans of your size. Plans under $1 million should have fees from 1.42 percent to 2.3 percent; plans over $1 million and up to $10 million: .87 percent to 1.62 percent.
Now that you have a frame of reference for evaluating the sum total of your fees, it’s time to find out exactly what fees are included in your plan. (Hint: You can request a fee disclosure form from Academy Benefit Partners to assist you.)
Does your 401(k) plan charge for any of the following services: record keeper fee; third-party administrator fee; custodian fee; advisor fee; fund cost fee; 3(38) manager fee (if applicable)? Once armed with the facts about your fees, you can consider what changes you may make to your plan. Follow up with questions to your plan provider.
You also can reduce costs by changing your advisor or changing plans. But should you actually change plans? Is it worth the pain of change? First, consider the costs of changing plans. Some vendors will levy a fee to move to another provider, but don’t let that stop you from continuing your quest for reduced costs. Compare the cost of moving a plan to the excess cost of keeping it status quo. If your provider is overpriced, it may still be more economical to move the plan despite the penalty fee.
This article was provided by The Payroll Company, an AAO-HNS Academy Advantage Partner. Contact Erika Young at 1-608-826-1111, via email at: erikay@payrollcompany.biz or www.academybenefitpartners.org to learn more.