September 30, 2011

Learn How to “CHECK” your 401(k)

Hey Financially Aware Friends!

This week’s Finance Friday is a Follow-Up to “What do you REALLY know about your 401(k).” I wanted to give you some info that will help in the evaluation of your 401(k) and the fees associated with your company’s plan. 

I know that even though most people use this as their first investment tool, when you get down to it a 401(k) is not the easiest thing for the everyday person to understand.  Hopefully, these questions will provide you with some understanding of what’s going on and what to look for regarding the fees associated with your plan.


QUESTIONS

  1. What are the investment options that are being offered under your 401(k) plan?
  2. Have you ever been provided all of the documentation regarding the investment choices that have been made under your company’s plan and ALL fees associated with it?
  3. What kind of investment education is provided regarding your 401(k) plan?
  4. How are the services provided under your particular 401(k) plan?
  5. What percentage of the optional services offered under your company’s 401(k) plan are being used by the participants?
  6. If there are administrative fees being paid, how are they paid?  By the plan? Your company? A combination of both?
  7. Are the investment options available based on an established market index or is there some sort of higher level of investments management service being provided?
  8. Are sales charges like loads and commissions being included in any of the investment options provided in your plan?
  9. Are any fees like surrender fees, insurance charges, or 12b-1 fees being included in any of the investment options provided in your plan? If so, what exactly do they include?
  10. Does your company’s 401(k) plan offer you any special funds or special classes of stock?


Keep in mind, these questions are only the beginning of your research.  When you invest your money for any reason – especially for the future of your retirement, you need to monitor the performance continuously.  It is your responsibility to yourself to remain informed and work with people who fully answer your questions and put your mind at ease. 



Having an actively managed retirement plan is one of the most highly recommended options – HOWEVER make sure it’s the right kind of actively managed plan.  As we Fashionable ones know, you don’t have to spend a million bucks to look like it.  In this case, again you MUST compare and contrast.  What are the net returns in relation to the investment risk?

Additionally, understand any service rendered with have a cost or fee associated with it.  But, the fees should not devour your investment!  When evaluating the fees associated with your 401(k) plan take time to compare the services you are receiving vs. the total cost.

To conclude, I found this helpful checklist that should be helpful when speaking to your plan sponsors regarding the fees associated with your plan.  (via)



Administration/Recordkeeping:
XX
__
No
__
Yes
Fee__________
Annual Audit:
__
No
__
Yes
Fee__________
Back-End Load
__
No
__
Yes
Fee__________
Balance Inquiry:
__
No
__
Yes
Fee__________
Brokerage Commission:
__
No
__
Yes
Fee__________
Contract Administration Charge:
__
No
__
Yes
Fee__________
Contract Termination Charge:
__
No
__
Yes
Fee__________
Distribution Expense:
__
No
__
Yes
Fee__________
Expense Ratio (Average and range):
__
No
__
Yes
Fee__________
Front-End Load:
__
No
__
Yes
Fee__________
Installation Fee:
__
No
__
Yes
Fee__________
Investment Transfer Expense:
__
No
__
Yes
Fee__________
Loan Maintain /Repay Tracking Fee:
__
No
__
Yes
Fee__________
Loan Origination Fee:
__
No
__
Yes
Fee__________
Loan Processing Fee:
__
No
__
Yes
Fee__________
Management Fee:
__
No
__
Yes
Fee__________
Mortality Risk, Admin (M&E Fee):
__
No
__
Yes
Fee__________
Nondiscrimination Testing Expense:
__
No
__
Yes
Fee__________
Participant Education Expenses:
__
No
__
Yes
Fee__________
Plan Document Letter (Filing Fee):
__
No
__
Yes
Fee__________
Product Termination Fee:
__
No
__
Yes
Fee__________
Service Provider Termination Fee:
__
No
__
Yes
Fee__________
Signature Ready Form 5500 Fee:
__
No
__
Yes
Fee__________
Start-up/Enrollment Expense:
__
No
__
Yes
Fee__________
Trustee Services:
__
No
__
Yes
Fee__________
Wrap Fee:
__
No
__
Yes
Fee__________
12b-1 Fees:
__
No
__
Yes
Fee__________


That’s it for this Friday’s Finance Friday segment. I hope you learned and feel a bit more financially empowered.  

Love You for Following,
G


7 comments:

  1. Hey G! You know I've been waiting for this follow up. My head is spinning tryin to wrap my head around it. The checklist will be a great place to start!

    Thanks so much!
    Less Is More

    ReplyDelete
  2. Thanks so much for this G!
    Great info
    love the blog changes

    ReplyDelete
  3. I love how useful this post is!! I really wasn't too informed about utilizing your 401k. =] You've helped more women than you probably know ;].

    ReplyDelete
  4. this will come in great when Im negotiationg for my new job...thanks

    xoxo Monroe

    Fashion Steele NYC

    ReplyDelete
  5. I am so glad you ladies enjoyed this post. Please use the tips to your advantage!

    G

    ReplyDelete
  6. Thank you so much for following my blog.
    I cannot find the ggogle gadget to follow yours.
    I do not have Bloglovin.
    XXXXXXXXXXXXXXXXXX

    ReplyDelete
  7. Thx G!! I had been anticipating this follow up post. I will definitely cut & paste the checklist and follow up with my plan administrator -- those questions come in handy too!! Thx for these Friday -- they are invaluable!

    ReplyDelete

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