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Are Your 401(k) Fees Eating into Your Retirement Savings?

Published on September 30, 2014

Many employees enroll in their employers’ 401(k) savings plans because these plans provide the discipline of regular contributions and certain pre-tax advantages. However, these retirement plans can end up being pricey, with hidden fees that participants might not readily notice.

Does Your 401(k) Have Hidden Fees?


There are underlying expense ratio fees paid to the fund managers from the investment vehicles (which are usually mutual funds), and the account managers do possess specific expertise which costs money. However, these fees are not charged directly to your 401(k) which is why account holders don’t notice them right away. Rather, they are deducted from the fund’s overall return. If your 401(k) allows you the ability to purchase individual stocks and bonds (as opposed to mutual funds) you can moderate that expense ratio somewhat; however, it is very rare to have individual stocks and bonds available through a 401(k). This points to another major issue: with a 401(k) fund for many people is that the investment choices are decided by the administrators.

High fees can also spring from a poorly managed fund—one that does not meet its investment goals. Fees are also affected by the number of participants in the plan. Over the course of many years, the expense ratio can consume a hefty percentage of a portfolio’s return. (NOTE: In response to these issues, as of 2013, all 401(k) statements must be distributed quarterly and show all fees that each participant pays.)

A Self-Directed 401(k) Puts You In Control

Wouldn’t you rather control your own investments with a self-directed retirement plan—or a self-directed 401(k)? Depending on your employer (or if you are the employer, setting up a plan for your staff), you can have a self-directed 401(k), self-directed SIMPLE IRA or self-directed SEP IRA that allows account owners to make their own investment decisions from a broader array of asset classes. You, as the account holder, can set your investment goals, choose from the types of investments—both traditional (stocks, bonds, mutual funds, CDs) and nontraditional (real estate, precious metals, commodities, private placements, loans and so much more).

The self-directed plan is administered by a third party like Next Generation Trust Services, who makes sure all your investment instructions are properly executed, that you are investing within stated IRS guidelines, and that all the appropriate and mandatory paperwork, reporting and filing is done on time and correctly.

Next Generation Trust Can Help You Get Started With A Self-Directed Retirement Plan

Through self-direction, you control your investment choices and your financial future. If you need more information or want to get started with this type of retirement strategy, you can read more online or contact Next Generation at (888) 857-8058 or Info@NextGenerationTrust.com

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