Thursday, September 3, 2015

Settlement Of Claims Against Employers For High Fee Funds in 401(k)s

Boeing is the most recent company that employees have held to account for mismanaging its 401(K) plan. Employers offering such retirement plans have a legal obligation to ensure that its employees are not hit with excessive management fees:

If a company does right by its workers, it finds low-cost, well diversified, smart investment choices, many experts say. But Schlichter says some companies offer workers mutual funds with fees that are way too high. Sometimes, he says, the companies get kickbacks for that.

By offering high cost options in its 401(k), a company can cost its employees hundreds of thousands of dollars over the life of the investments. For example, a fee that is only one percent higher will cost employees 28% in returns over a 35-year work career. What does this mean for you?

[G]enerally, if you're paying less than 0.5 percent in fees total for your investments, you're doing well. But if you're paying more than 1 percent, you're losing a lot of money over time.

Is your company's 401(k) costing you more than it should?

No comments: