Wednesday, June 24, 2015

Now Offering Lower 401(k) Fees!

Last October, I wrote a couple of articles about how 401(k) fees can be a hidden danger, sucking away huge amounts of money almost undetectably. As part of that process, I went over the investment options in my 401(k) and found ones with the lowest fees that still met my investing goals. I dropped my overall fee expense from 0.749% annually to 0.675%. That's still higher than I would like, but it was the best I could do with the choices I had. company conducted their annual employee survey several months ago and one of the things I mentioned in my response was that I would like to have more low fee options in the 401(k). Apparently, I wasn't the only one complaining about this because it was recently announced that the company was moving our 401(k) to another provider. We were given the details and options of the new plan and, I am pleased to report that many more low fee options are offered. Notably, whereas the old plan was loaded with mutual funds that have 12b-1 fees and sales fees in the 4.75% to 5.25% range, almost all the funds offered in the new plan don't have either of those fees. Furthermore, they offer funds with much lower annual fees. To my delight, they offer several Vanguard index funds - the Admiral shares no less, where the fees are in the 0.05% to 0.09% range.

I've reallocated my assets to the new funds and I re-ran my analysis to see how much my fees dropped. In the old plan, I was paying 0.675% annually. With the new plan, I've dropped that down to 0.273%. Nice! I now have approximately 60% of my investments in funds that charge 0.09% or less. That will let my investment grow by almost an additional $100,000 by the time I retire.


  1. I did an experiment the last time you wrote about this. I transferred half of a target 2030 fund with significant fees to the Vanguard S&P Index fund with very low fees. The target 2030 blended fund has 90% of the assets in stocks, so performance sans fees should be similar. As of last night, the Vanguard fund is ahead over $3000.

  2. Nice! I'll only charge you 10% of that savings :-)