|
Look Out For The Hidden 401(k) Costs... |
|
|
|
|
Tuesday, 03 April 2007 |
By Mark Lund
When it comes to your 401(k), you probably don’t think about fees. After all, your employer foots the bill, right?
Wrong. Employees typically paid mutual-fund expenses, but now more are shouldering administrative expenses, which employers used to pay.
“Fees for 401(k) plans run anywhere from 10 basis points (0.10 percent) for IBM’s plan to 300 basis points (3 percent),” says Ted Benna, who created the first 401(k) plan in 1981 and is founder of the 401(k) Association, a Pennsylvania benefits consulting firm. At a Fortune 500 corporation, your fees are likely to be lower than what you would pay if you worked for a small company; 90 percent of plans cover fewer than 100 participants.
Depending on their size, fees can determine whether your nest egg looks like an ostrich’s or a sparrow’s. Say you invest $50,000 in a plan that charges a 0.5 percent fee, and you enjoy an 8 percent annual return for 30 years. You will retire with $437,748. Pay fees of 1.5 percent and you will have $107,000 less. (Rate of return is for illustrative purposes only)
The fees are not always visible. Typically, a broker will set up a company’s plan at no charge, bundling fees for administering the account with mutual-fund expenses. The broker stuffs the plan with higher-cost share classes, which drain money from employees’ accounts. “In essence, the company shifts the costs of administering the plan directly to the employees,” explained Don Phillips, Managing Director of Morningstar, the Chicago-based mutual-fund research company.
If you or someone you know needs some help managing retirement assets, setting up a retirment savings plan, or have life insurance needs, just give me a call at 801-545-0696 or visit us at www.stonecreekwealthadvisors.com
Respectfully,
Mark K. Lund, CRFA
Wealth Manager
Stonecreek Wealth Advisors, Inc.
10421 So. Jordan Gateway, Suite 600
So. Jordan UT 84095
801-545-0696
Securities offered through Sammons Securities Company, LLC
Member NASD and SIPC
P.S. If there is a topic or question you would like to have explored in one of my newsletters, please feel free to submit any questions or topics for discussion on the enclosed coupon.
Mark K. Lund, CRFA, has spent almost a decade as a Wealth Manager, serving the retirement planning needs for clients in Salt Lake City, Utah. Mark is one of a very small number of retirement planners across the country trained in retirement tax strategies. Most financial professionals typically take only one aspect of your personal finances and attempt to make it grow in a very linear, single-dimensional fashion. That’s why they don’t bother to correlate other items or tax issues in your total financial picture! Mark looks at all four phases of wealth accumulation to plan the most effective way to manage your wealth. To learn more about Mark, please visit http://www.stonecreekwealthadvisors.com
Article Source: http://EzineArticles.com/?expert=Mark_Lund
http://EzineArticles.com/?Look-Out-For-The-Hidden-401(k)-Costs...&id=499200
|
