Fees on Small 401ks

saphireJuly 21, 2007

DH is self employed with under 10 employees. A couple of years ago (when I was not paying attention) he started a safe harbor 401k for him and his employees. He also rolled the proceeds of the SIMPLE he previously had into the 401k (I really wish he had just been able to put it into an IRA).

His 401k is being administered through a big financial service company through some arrangement they have with his professional association. So for example it is through the American Society of Archeologists ASA(DH is not an Archeologist just an example). The financial agency limits them to 8 mutual funds which range from the Vanguard 500 to a Value fund that has fees in excess of 1.2% per year (for all investors). On top of this the Financial Service Company takes a .65% fee of net assets per year. It also has $3 nuisance fees periodically.

Is this a reasonable amount to take? To be honest they seem very full service and have always answered my questions very patiently whenever I have called. My main problem is that the mutual fund choices are limited or are funds with high fees especially when you add in their annual fee. The ASA gets nothing from our participation. While I am no investing genius, I read alot and used to work with the securities industry

Also can he take out the money he rolled in there from his SIMPLE two years ago and move that into an IRA? It was the same office, he just changed the type of retirement plan

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Might it be worth checking whether he can switch his company's 401k to Vanguard? I don't know whether Vanguard is willing to administer small-business 401k's, but if they are, I'll bet their fees are less than .65%/year.

    Bookmark   July 25, 2007 at 9:24AM
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