Save up to 25% on your 401(k) without changing your plan

The participants of your 401k plan may be able to save as much 25% of the current annual costs. Here is how this can happen.

Recent changes in 401k reporting have benefited plan sponsors but you may not be aware of this. Most plan providers have created less expensive platforms, and more transparent platforms.

“If your plan is a few years old or older it is almost certainly not your providers most recent most cost efficient platform” according to Rick Adams who serves as a fiduciary through Adams-Hansen & Associates. Sadly most providers are not volunteering the fact that they have a better alternative to the plan sponsor community. Generally the sponsor finds out while in the process of shopping for a new plan: many people do not want to go through the effort of shopping so they are not aware they could get a better deal with their current provider.

A couple of simple suggestions:

Just ask. Contact your advisor or the provider directly and ask for a fee reduction.

Request a proposal:

Even if you do not request a proposal from anyone else, request one from your current provider. They will not know whether or not they are in competition. They will probably assume they are.

Engage a Fiduciary:

Hire someone to who manages money and plans for a living and ask them to reduce your plan expenses. “Recently we were applying for a job as a fiduciary with a firm that has a $35,000,000 plan. We delivered a portfolio whose funds would cost less money while adding effectiveness and isolated exactly what the provider thought their margin was for administration. When the company requested an appointment with their large provider, they reduced the cost of their funds AND administration, saving the client 40% of the overall plan costs.”

Our experience from preliminary audits on much smaller 401k’s, reflects the same issue that can be addressed saving the participants and/or the business owner/s costs of the plan.

Focus on fund costs and share classes:

Ask your advisor to recommend funds without 12b1 fees and that are relatively inexpensive. The sales person is well paid, utilize them to reduce your costs.

Rick Adams is an investment advisor representative of Adams-Hansen & Associates, a Registered Investment Advisor.

(952) 224-9085