Thursday, July 29, 2010

401(k) Costs

Apparently there have been some problems with 401(k) fees.

Employees of Edison International won a big victory this month when a federal judge ruled that the company's 401(k) fees were excessive and said employees were entitled to recover an as-yet-undetermined amount of overcharges.

U.S. District Judge Stephen Wilson said in an 82-page decision that Rosemead-based Edison did "substantial" harm by failing to negotiate lower prices with the outside firm running the 401(k). A large company such as Edison easily could have gotten a better deal on three of the mutual funds in its plan, but simply didn't try, the judge said.

The Edison case is one of more than two dozen lawsuits filed against U.S. employers in recent years. The suits allege that companies allowed 401(k) providers to stuff the plans with high-cost investments in exchange for reducing the administrative costs paid by the employers themselves ...

TAG's 401(k) Plan has a wide range of investments, the least expensive being Vanguard's Target Retirement series with .19% in fees, the most expensive Gabelli Small Cap Growth at 1.45%. (We have twenty-one different funds in all.)

Our goal from the start was to keep the Plan's costs as low as possible; that's why we pushed to get the Vanguard funds into the mix. (They are far and away the most cost-effective offerings out there, and we knew they would be a good addition to our other jams and jellies.)

For those of you in the TAG Plan, give us a call if you have questions about any of the funds being offered.

For those of you in other 401(k) Plans, be sure you check administrative fees for the investments in which you're participating, and ask questions if the dollar costs seem high and you don't have other options.

It's your dough, after all, so invest the greenbacks wisely.


Site Meter