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The problem is with 401(k)s is that most plans don't have that many options, and its common for all of them to be expensive (compared to what you can get elsewh
by jcdavis 13y ago
The problem is with 401(k)s is that most plans don't have that many options, and its common for all of them to be expensive (compared to what you can get elsewhere). And not putting your money in 401(k)s is even worse due to the extra taxes.
- sopooneo 13y agoI am very ignorant here. Do you know if putting your 401K money into passively managed index funds typically results in higher fees than if you invested in similar accounts outside your 401K? That is, can you escape having extra fees inside your 401K?
- hkmurakami 13y agoI saw a few (2?) passively managed index tracking funds in my former employer's 401k plan. IIRC their fees were something like 0.15%/year, which is higher than the <0.1%/year fee of the large index tracking funds with market caps greater than $40BB, but still reasonable compared to the actively managed funds that are offered.
- jcdavis 13y agoMost funds available in your 401k could also be bought in a taxable account with the same fees, but it almost never makes sense to do so because there are so much superior alternatives (ie pretty much anything from Vanguard).
- idunno246 13y agoYes. Most 401k plans pass on additional management fees on top of the fund's fees. In my current plan, a passive sp500 index would cost 1.6%, 0.6% for the funds expense ratio, and 1% to the plan administrator. Outside the 401k you'd pay 0.6% for the same fund. The vanguard plan that matches a similar index costs 0.17%(admiral is 0.05% with 10k balance) Unless you work at a large company. At one, I had access to the vanguard institutional funds, which were even cheaper than the admiral