Wednesday, November 21, 2012

401(k) Plan Costs

It's time again for TAG 401(k) enrollment meetings. Therefore, let's provide you with a bit of useful 401(k) information.

New 401(k) Disclosure Rules? Why Should I Care?

New rules could save 401(k) investors thousands of dollars – if they would only read their account statements, say labor officials who beg you to “open the envelope.”

By now, most 401(k) investors have received the first quarterly reports to be issued under new federal rules requiring full disclosures of fees and other plan expenses. Whether investors have read the statements is another question entirely.

The quarterly statements are due no later than Nov. 14, or 45 days from the end of the third quarter. They follow the first annual disclosure of plan expenses that were due by August 30, 2012.

“Open the envelope that you get with this information in it, and actually take a look at the information you’re receiving,” Phyllis Borzi, a Department of Labor official who oversees 401(k) plans, said in an archived webinar on the new disclosure rules, designed to benefit participants who manage their own 401(k) investments in so-called self-directed plans. “I know you get a lot of mail and you’re probably more interested in some of the other pieces of information,” Borzi said. “But opening this envelope and looking at this information is the first step to retirement security.” ...

To let you know, the trustees of the TAG 401(k) Plan have been very aware of costs, and they're working to keep TAG 401(k) expenses as low as possible by

1) Getting the lowest-cost share classes for Plan funds.

2) Checking how much the Plan's third-party administrators (currently Mass Mutual and 401(k) Advisors) are charging for services. And making sure those charges are cost competitive.

Here's one fine little factoid that every participant in 401(k) Plans should know: Index funds have lower fees than actively managed funds. Further, index funds out-perform actively-managed funds over longer periods of time. As TIME Magazine reports:

Index mutual funds trounced actively managed mutual funds last year by the widest margin in 15 years ...

Among large-cap fund managers, 79% trailed the return of the S&P 500, says fund tracker Morningstar. That is a stunning display of futility — and sadly, these results aren’t all that unusual. More than half of active managers underperform their benchmark year after year.

Inside the TAG 401(k) Plan, a variety of index funds are offered. And the Vanguard Target Date Funds, which are the Plan's biggest lineup of index funds, give participants an "all-in-one" allocation of bonds and stocks in a single, handy package. (Plus they're the least expensive offering TAG 401(k) Plan has.)

If you're out in the wider blogosphere, you should seriously look at the way you're investing and the funds you are choosing from your 401(k) Plan. If you're a TAG member reading this, you should start sheltering some of your income by using the TAG 401(k) Plan ... and do it by indexing. I'm going to be doing a LOT of enrollment meetings (listed below) over the next few weeks, so accessing my smiling countenance and vast knowledge* should be easy.

TAG 401(k) Enrollment Meetings

Bento Box
Wednesday, December 10, 10 am
Main Break Room

Cartoon Network
Wednesday, November 28, 1 pm
Main Conference Room

Disney Feature Animation
Tuesday, November 27, 10 am
Southside Building, Room 1300

Disney Toon
Tuesday, November 27, 10 am
Conference Room 103

Disney TV Animation
Tuesday, December 11, 10 am
Sonora Building, Room 1172

Disney TV Animation
Tuesday, December 11, 2 pm
Empire Center, Room 5223

DreamWorks Animation
Thursday, November 29, 2 pm
Dining Room B & C

DreamWorks Animation Television
Thursday, December 13, 2 pm
Main Conference Room

Film Roman
Wednesday, December 4, 2 pm
"Glass" Conference Room

Fox TV Animation
Thursday, December 6, 2 pm
Main Conference Room

Marvel Animation
Wednesday, November 28, 9:30 am
Main Conference Room

Wednesday, December 12, 2 pm
Main Conference Room

Robin Red Breast
Thursday, November 29, 10 am
Motor City Conference Room

Warner Bros. Animation
Wednesday, December 5, 2 pm
Building 34R - Main Conference Room

* Sarcasm


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