Comments on: How to Tell if You Have a Bad 401k Plan http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/ Helping a unique generation achieve financial independence. Thu, 09 Feb 2012 03:12:52 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Patty Hobbs - Selling Techniques http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-137931 Patty Hobbs - Selling Techniques Thu, 15 Jul 2010 08:47:42 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-137931 I'm 60 years old and some of my colleagues told me that I could increase my contribution for my 401k plan and my company should match whatever contribution I additionally pay. Please advise if this is legal. I’m 60 years old and some of my colleagues told me that I could increase my contribution for my 401k plan and my company should match whatever contribution I additionally pay. Please advise if this is legal.

]]> By: Dean Voelker http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-129961 Dean Voelker Mon, 29 Mar 2010 15:24:31 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-129961 Thanks Dave, Several good points you've made. I am an advisor, and I have done 401(k) reviews for companies. You are right, there are a lot of bad plans out there. What is really bad is when the employer has someone who doesn't care at all about their plan and doesn't take the fiduciary role seriously. That is why to get plan reform, you may need several employees to get the message across. Penelope Wang says the same thing in her article. The biggest problem with 401(k)s to me is that employees need a much better understanding of how it works. They need to realize that the 401(k) is their retirement savings plan. Pensions are gone. For the 401(k) to work, employees need more professional advice on how much to save, how to diversify, etc. Interesting that you mention how several funds DO beat the index. In my book, "Help! My 401(k) Has Fallen - And Must Get Up!" I devote a chapter to the S&P 500. It consists of 500 large cap companies in the US, so it is NOT diversified as we are led to believe. I also show illustrations of some common funds which have outperformed the S&P for the past 10 years. The book should be available by late April/early May. A free report "The 5 Biggest Problems With 401(k) Plans - And How To Fix Them" is also available through my website. Thanks Dave and all repliers for some thoughtful comments. Thanks Dave,

Several good points you’ve made. I am an advisor, and I have done 401(k) reviews for companies. You are right, there are a lot of bad plans out there. What is really bad is when the employer has someone who doesn’t care at all about their plan and doesn’t take the fiduciary role seriously.

That is why to get plan reform, you may need several employees to get the message across. Penelope Wang says the same thing in her article. The biggest problem with 401(k)s to me is that employees need a much better understanding of how it works. They need to realize that the 401(k) is their retirement savings plan. Pensions are gone. For the 401(k) to work, employees need more professional advice on how much to save, how to diversify, etc.

Interesting that you mention how several funds DO beat the index. In my book, “Help! My 401(k) Has Fallen – And Must Get Up!” I devote a chapter to the S&P 500. It consists of 500 large cap companies in the US, so it is NOT diversified as we are led to believe. I also show illustrations of some common funds which have outperformed the S&P for the past 10 years. The book should be available by late April/early May.

A free report “The 5 Biggest Problems With 401(k) Plans – And How To Fix Them” is also available through my website.

Thanks Dave and all repliers for some thoughtful comments.

]]> By: dave http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-129956 dave Mon, 29 Mar 2010 14:25:25 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-129956 I read the Penelope Wang article and gto a little fired up. A few things were correct and good advice and others were way off the mark. Again its good to atleast have an index fund in the line up for large cap, like and S&P 500 Index fund but long term many funds do....yes I said DO beat the indexes. I always include a SMall cap index because small cap funds can easily go from top performer to bottm performer (James Small cap) as an example. One huge mistake she made, and that employees need to know, is that it doesn't take a BILLION dollars to get institutional shares. I provide institutional shares for plans with a Million dollars or more. She was only off by about 900 million. Yes, and thanks Dean, Gettinga group together to bring it to the benefits team would be a good approach. Even putting up an annonomous sign up poster saying "who wants a better 401k?" would be very powerful...of course you need to promote it a little so it doesn't backfire when the HR, benefits and owners see it. if it has no signatures you'll be in for several more years of getting the shaft. Why do companies end up with poor 401ks to begin with? 1. 401k salesmen are like used cars salesmen. They use the typical selling techniques like creating urgency by tellign the owner he only has ten days for this super special once in a life time price. False! normaly a price is good for 60 days. 2. No one at the company has the expertise to compare the plans. I've run into CFO's who didn't make a single logical statement when I was explaining the different plans. 3. Salesmen over sell their benefits and services to an extreme and then leave the company and participants with a fraction of what they promised. And the bigger the 401k provider selling the bigger the story. They hire and pay their salemen well, and in my opinion thye higher those who have sold their soles to the devil for profitts, but hey its the financial world and we should expect that after what we've learned over the years. I read the Penelope Wang article and gto a little fired up. A few things were correct and good advice and others were way off the mark. Again its good to atleast have an index fund in the line up for large cap, like and S&P 500 Index fund but long term many funds do….yes I said DO beat the indexes. I always include a SMall cap index because small cap funds can easily go from top performer to bottm performer (James Small cap) as an example. One huge mistake she made, and that employees need to know, is that it doesn’t take a BILLION dollars to get institutional shares. I provide institutional shares for plans with a Million dollars or more. She was only off by about 900 million.
Yes, and thanks Dean, Gettinga group together to bring it to the benefits team would be a good approach. Even putting up an annonomous sign up poster saying “who wants a better 401k?” would be very powerful…of course you need to promote it a little so it doesn’t backfire when the HR, benefits and owners see it. if it has no signatures you’ll be in for several more years of getting the shaft.
Why do companies end up with poor 401ks to begin with?
1. 401k salesmen are like used cars salesmen. They use the typical selling techniques like creating urgency by tellign the owner he only has ten days for this super special once in a life time price. False! normaly a price is good for 60 days.
2. No one at the company has the expertise to compare the plans. I’ve run into CFO’s who didn’t make a single logical statement when I was explaining the different plans.
3. Salesmen over sell their benefits and services to an extreme and then leave the company and participants with a fraction of what they promised. And the bigger the 401k provider selling the bigger the story. They hire and pay their salemen well, and in my opinion thye higher those who have sold their soles to the devil for profitts, but hey its the financial world and we should expect that after what we’ve learned over the years.

]]> By: Dean Voelker http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-129948 Dean Voelker Mon, 29 Mar 2010 11:55:51 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-129948 It also helps to get several people together when you approach the 401(k) rep for your employer. there is strength in numbers. No company wants a bunch of unhappy employees. It also helps to get several people together when you approach the 401(k) rep for your employer. there is strength in numbers. No company wants a bunch of unhappy employees.

]]> By: 401k adviser http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-129794 401k adviser Fri, 26 Mar 2010 20:49:30 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-129794 THE TRUTH WOW! lots of confusing advice. The point is you want the best investments NET any fees. And you can change your plan if you have a bad one. 1. First fund expenses need to be taken in context. Sure you can get the Vanguard index fund for .18 or known in the business as 18 bases points or 18 beeps. But if your ten year avrg is -.39....OUCH! Wouldn't it be nice to have earned an average of 7.8% for ten years...Oakmark I fund did in the same category (Large Blend) but you can't get that in a Fidelity plan or a Principle plan. The point is you want the best retunr on your money and to get that you need low fees and an Open architecture plan. This way you can choose the best funds in each category and not have to pick from a list of average or poor performing Fidelity funds or annuity funds. Do you think Fidelity hands over their good funds to a captive audiance...does concert or sports venues have $1 beer night...NOOOOO. Get a clue and demand that your company find and open architecture plan (if it has a total of a million dollars or more) with low fees. Then just pick the best funds in the best funds inteh categories. Remember the performance should be net fund expenses so focsu more on fund performance. dave4653@yahoo.com THE TRUTH
WOW! lots of confusing advice. The point is you want the best investments NET any fees. And you can change your plan if you have a bad one.
1. First fund expenses need to be taken in context. Sure you can get the Vanguard index fund for .18 or known in the business as 18 bases points or 18 beeps. But if your ten year avrg is -.39….OUCH! Wouldn’t it be nice to have earned an average of 7.8% for ten years…Oakmark I fund did in the same category (Large Blend) but you can’t get that in a Fidelity plan or a Principle plan.

The point is you want the best retunr on your money and to get that you need low fees and an Open architecture plan. This way you can choose the best funds in each category and not have to pick from a list of average or poor performing Fidelity funds or annuity funds. Do you think Fidelity hands over their good funds to a captive audiance…does concert or sports venues have $1 beer night…NOOOOO.

Get a clue and demand that your company find and open architecture plan (if it has a total of a million dollars or more) with low fees. Then just pick the best funds in the best funds inteh categories. Remember the performance should be net fund expenses so focsu more on fund performance.
dave4653@yahoo.com

]]> By: Dean Voelker http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-129342 Dean Voelker Thu, 18 Mar 2010 20:31:53 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-129342 Hi Sheila, You bring up some great points. One of the biggest things wrong with today's 401(k) plan is the lack of education given to employees on how to use the plan. Penelope Wang of Money Magazine has an article from the March 2010 issue "What To Do With A Bad 401(k)". She mentions that all plans have some flaws, with funds and fund management fees. There are new regulations but many employers haven't learned them yet. As an advisor, one question I ask on 401(k) reviews is "What process are you using to frequently review the funds in your plan for performance and fees as they compare to their peers?" There has to be a monitoring system in place. I compare this to 'bananas'. What happens if you let bananas sit too long? Well, in a 401(k) plan, you always want the 'freshest' and least costly bananas. I have a book coming out, "Help! My 401(k) Has Fallen - And Must Get Up!" This book is written in layman's terms to help people just like you to get more out of their long term savings. You can visit my website also for a free report, "The 5 Biggest Problems With 401(k) Plans". I hope I may be able to help. Hi Sheila,
You bring up some great points. One of the biggest things wrong with today’s 401(k) plan is the lack of education given to employees on how to use the plan. Penelope Wang of Money Magazine has an article from the March 2010 issue “What To Do With A Bad 401(k)”. She mentions that all plans have some flaws, with funds and fund management fees.

There are new regulations but many employers haven’t learned them yet.

As an advisor, one question I ask on 401(k) reviews is “What process are you using to frequently review the funds in your plan for performance and fees as they compare to their peers?” There has to be a monitoring system in place.

I compare this to ‘bananas’. What happens if you let bananas sit too long? Well, in a 401(k) plan, you always want the ‘freshest’ and least costly bananas.

I have a book coming out, “Help! My 401(k) Has Fallen – And Must Get Up!” This book is written in layman’s terms to help people just like you to get more out of their long term savings. You can visit my website also for a free report, “The 5 Biggest Problems With 401(k) Plans”. I hope I may be able to help.

]]> By: Sheila http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-124039 Sheila Wed, 13 Jan 2010 12:34:11 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-124039 Although my employer has a match and offers a selection of funds, the vesting schedule for their plan doesn't reflect reality. These articles ignore the fact that all of these plans have very long vesting schedules. If it takes 6 years to get your money, and in the meantime the majority of employees no longer stay with a company for more than 2 or three years on average, isn't this all just a big fat phoney shell game designed to delude employees into thinking they're getting something they're not? In addition, employers don't fulfill their responsibilities when it comes to offering investing classes. They pre-select the funds for YOU and assume we're all dummies that need to be led by our noses. They determine how your money is invested without any input from YOU. This infuriates me. Currently my employer offers few funds, and all funds which have underperformed the market for 6 years! I have a better track record of investing my own money but my employer also doesn't offer a self-directed option. Time to get rid of the entire 401K model and let people defer 15% of their own income themselves and receive a yearly contribution from the employer. The 401K plan is obsolete and does a disservice to most employees. It needs major legislative overhaul or needs to be chucked. Although my employer has a match and offers a selection of funds, the vesting schedule for their plan doesn’t reflect reality. These articles ignore the fact that all of these plans have very long vesting schedules. If it takes 6 years to get your money, and in the meantime the majority of employees no longer stay with a company for more than 2 or three years on average, isn’t this all just a big fat phoney shell game designed to delude employees into thinking they’re getting something they’re not? In addition, employers don’t fulfill their responsibilities when it comes to offering investing classes. They pre-select the funds for YOU and assume we’re all dummies that need to be led by our noses. They determine how your money is invested without any input from YOU. This infuriates me. Currently my employer offers few funds, and all funds which have underperformed the market for 6 years! I have a better track record of investing my own money but my employer also doesn’t offer a self-directed option.

Time to get rid of the entire 401K model and let people defer 15% of their own income themselves and receive a yearly contribution from the employer. The 401K plan is obsolete and does a disservice to most employees. It needs major legislative overhaul or needs to be chucked.

]]> By: sandy http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-122609 sandy Fri, 23 Oct 2009 02:33:11 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-122609 hello,our company sold out to a privet owner they then reinvested my 401k with their investers ??. then layed us off indeffently.. how should i handle this?? what are my opptions hello,our company sold out to a privet owner they then reinvested my 401k with their investers ??. then layed us off indeffently.. how should i handle this?? what are my opptions

]]> By: arthur l howle http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-107893 arthur l howle Thu, 26 Feb 2009 02:53:50 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-107893 I was terminated from my job Oct.2008 I was contributing to a company 401 k but only had done so for 2 years/ I am 63 years old. I contacted the 401k principle group to do a direct rollover of my entire acct. to a IRA/CD all of the funds were transferred except $1500.which princple group said belonged to an acct that was frozen until funds could be released. does this sound legal. Am I able to apply for this balance under the harship rule since I lost my job? please advise. Art Howle I was terminated from my job Oct.2008 I was contributing
to a company 401 k but only had done so for 2 years/
I am 63 years old. I contacted the 401k principle group
to do a direct rollover of my entire acct. to a IRA/CD
all of the funds were transferred except $1500.which
princple group said belonged to an acct that was frozen
until funds could be released. does this sound legal.
Am I able to apply for this balance under the harship
rule since I lost my job? please advise. Art Howle

]]> By: Jeremy http://genxfinance.com/how-to-tell-if-you-have-a-bad-401k-plan/comment-page-1/#comment-81148 Jeremy Thu, 31 Jul 2008 20:03:33 +0000 http://genxfinance.com/2008/07/29/how-to-tell-if-you-have-a-bad-401k-plan/#comment-81148 Chris, that is another good point. All of these comments are telling me I should do a comprehensive compare and contrast of different retirement plans. But in 2005 the laws were changed to provide added protection to IRAs, so they are a bit safer, but as you mentioned, a standard qualified plan is still going to be a bit safer for most people as there are some state exemptions and limitations that can be placed on IRAs. So, that is another valid reason to consider the 401k if you're eligible for one. It is also a good reminder that having an umbrella policy in place is always a good idea if you have assets to protect as well. Chris, that is another good point. All of these comments are telling me I should do a comprehensive compare and contrast of different retirement plans.

But in 2005 the laws were changed to provide added protection to IRAs, so they are a bit safer, but as you mentioned, a standard qualified plan is still going to be a bit safer for most people as there are some state exemptions and limitations that can be placed on IRAs.

So, that is another valid reason to consider the 401k if you’re eligible for one. It is also a good reminder that having an umbrella policy in place is always a good idea if you have assets to protect as well.

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