Hacker News new | ask | show | jobs
by paxys 231 days ago
If you work for a large company it is possible that they have negotiated better pricing for their 401k plan than what Vanguard or some other brokerage offers off the shelf. For example Vanguard charges 0.08% for its target date retirement funds, but the one I get on my old employer's plan (BlackRock LifePath) is just 0.037%. And the retail price for that LifePath fund is a whopping 0.17%.
2 comments
alright2565 231 days ago
With how low fees have gotten, I think the more likely and more damaging situation is that where people's employers have negotiated much worse pricing for their captive audience. I wouldn't give 0.08% vs 0.037% a second thought any day. That's only difference of $400/yr on $1M!
link
specialp 231 days ago
The real mover for lower retirement plan fees was lawsuits. There have been loads of 401k excessive fee class action lawsuits and this got almost every employer negotiating to avoid this. Of course there's some plausible deniability in some cases but there is something on the other side against that https://hallbenefitslaw.com/401k-excessive-fee-class-action-...
link
paxys 231 days ago
Compound it over 30+ years and even those few bps add up to a significant amount.
link
dangus 231 days ago
Not really. If you start with a million dollars it’s adding $400 a year and compounding beyond that. But the median person doesn’t have that much in their portfolio…well, ever.

For most people micromanaging below 0.01% is like gaining a cup of coffee every year.

link
paxys 231 days ago
The question was - I don't understand why people keep money in their old 401k accounts.

The answer is - there are situations where it is favorable to do so. It may or may not be favorable for you, and it may or may not be favorable for the median person. But these situations exist. And everyone can check for themselves and make the best decision insted of arguing over a blanket "X is better" or "Y doesn't make sense".

link
dangus 231 days ago
Sure, I agree with that general sentiment, but I think there’s probably a ~90% chance that you should rollover somewhere else.
link
dangus 231 days ago
Usually when you leave the company they start charging a quarterly service fee. Be careful out there.
link
datadrivenangel 230 days ago
Not all of them due, which is why I was so surprised to get dinged by this!
link