401(k) fees checklist

Many 401(k) plan participants are concerned about the fees in the plan as a result of increased media and governmental focus on this issue. How do you get the best value for your money and is your 401(k) on target to deliver the benefits you expect?

401(k) plan participants began paying more attention to the fees and performance of their retirement accounts after August 2012 when new federal regulations required additional disclosures to all 401(k) plan participants. We believe that the only logical approach to improve 401(k) plan results is through independent advice – separate from the firms that provide retirement plan and investment services. A simple three step analysis

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, review and planning exercise will address these concerns and put your retirement plan back on the right track.

Ask questions

The Department of Labor prepared this ten point checklist to help 401(k) plan participants gain an understanding of these fees and potential areas for improvement:

  1. What investment options are offered under your company’s 401(k) plan?
  2. Do you have all available documentation about the investment choices under your plan and the fees charged to your plan?
  3. What types of investment education are available under your plan?
  4. What arrangement is used to provide services under your plan (i.e., are any or all of the services or investment alternatives provided by a single provider)?
  5. Do you and other participants use most or all of the optional services offered under your 401(k) plan, such as a participant loan program and insurance coverage?
  6. If administrative services are paid separately from investment management fees, are they paid for by the plan, your employer or are they shared?
  7. Are the investment options tracking an established market index or is there a higher level of investment management services being provided?
  8. Do any of the investment options under your plan include sales charges (such as loads or commissions)?
  9. Do any of the investment options under your plan include any fees related to specific investments, such as 12b-1 fees, insurance charges, or surrender fees, and what do they cover?
  10. Does your plan offer any special funds or special classes of stock (generally sold to larger group investors)?

Get independent advice

Plan participants should have access to independent 401(k) plan advice (an adviser not affiliated with the company that provides services to the 401(k) plan or its investments). An independent adviser typically compares the fees and services of your plan in comparison to similar fees and services on comparable plans in order to arrive at any  recommendations designed to lower fees and boost performance for the participants. More importantly, an independent adviser helps plan participants focus on a “big picture” assessment of whether the current accounts are on target to meet the participant’s overall expectations of a secure retirement.

Measure your progress

It is important to periodically re-evaluate your retirement planning in light of overall life changes. Freedom Benefits offers individual consultations to delve into these issues in more detail. A simple but highly effective interactive software program called “Taking the mystery out of retirement planning” is incorporated into our one-on-one discussions and group workshops for 401(k) plan participants. This “mini-planning” process takes only about an hour but delivers big results.

By taking these three simple steps –

  1. question 401(k) fees and performance
  2. access an independent advisor
  3. participate in a retirement planning evaluation

– it is possible to significantly improve performance and satisfaction with you 401(k) plan.

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