Employer 401K evaluation - high expenses?

[grannycaddy]

I'm a somewhat newish attending (<5 years) am trying to get a better sense of my employer 401k (I know, I probably should have done this awhile ago). I'm in a small group practice, the 401K has a 3% match, and I have always maxed out the 401K.The practice has signed me up for nationwide destination 2045 R6 (NWNIX). The ER is 0.41%, Turnover was 23% last year. Overall, seems like a fine 401K, not amazing. However, my major concern is that my statements contain an advisory/service provider expense which makes up 3% of the money I contributed. This seems high to me? Is this unusual? Thanks so much for any input/guidance. I really appreciate it!

[zlandar]

A 3% AUM (assets under management) admin/advisor fee for a 401k would be very high.

You should be receiving an annual 401k disclosure from your employer listing all the administrative and individual fees in the plan. Look for your most recent disclosure. It can either be mailed or emailed to you by your employer. If you don't have it ask the person handling the 401k or call your 401k provider directly and get a PDF or paper copy to review.

[spiritrider]

If you are actually paying a 3% AUM fee on top of a 0.41% fund expense ratio. You should only be contributing to the 401k up the the match.

The break even point of 401k tax deferral is somewhere in the 1.5% - 2.0% total fee range depending on (contribution vs. withdrawal) marginal tax rates, investments and personal circumstances.

This is so far over the line, not only should you only contribute up to the match. Your employer is clearly in significant breach of their fiduciary duties.

[litovskyassetmanagement]

I'm a somewhat newish attending (<5 years) am trying to get a better sense of my employer 401k (I know, I probably should have done this awhile ago). I'm in a small group practice, the 401K has a 3% match, and I have always maxed out the 401K.The practice has signed me up for nationwide destination 2045 R6 (NWNIX). The ER is 0.41%, Turnover was 23% last year. Overall, seems like a fine 401K, not amazing. However, my major concern is that my statements contain an advisory/service provider expense which makes up 3% of the money I contributed. This seems high to me? Is this unusual? Thanks so much for any input/guidance. I really appreciate it!

Get a copy of the participant fee disclosure from the plan sponsor. See what their fees are in detail. I've seen fees this high, but it is very rare/unusual to have such fees unless this is an insurance product of some sort (variable annuity inside a 401k plan or something similar). In any case, the owners of the practice should be concerned about losing money as they have most of the money in this plan (unless of course this was set up for staff only). I've seen various types of arrangements where owners might have separate brokerage accounts and participants are stuck in a subpar but possibly 'free' plan that is paid for entirely by participants/staff. If the owners are also participating and paying the same fees, they should be interested in lowering those fees. Definitely something to ask the owners about.