Expense Ratios

[cooliemae]

I was looking at the expense ratio I pay for my 401k account (at last count it was round 0.05%) and was wondering if that is good or just average for a 401k account.

[noppenbd]

Is that an overall account fee or a fee for the underlying funds in the 401k? Under 1% is good for the latter; I don't know about overall fees.

[aida2003]

I think the OP refers to the fees of administering his 401k. Expense ratio is different, IMO. You never see it in absolute $ presented on your statements.

[cooliemae]

To clarify, for every $1,000 I invest, it is costing me around $0.50. I'm curious whether that's good or about average?

[jIM_Ohio]

are you referring to fund expenses or plan expenses?

I pay no plan expenses
I pay around .5% in fund expenses.

[Broken Arrow]

Wait, so this is an added expense on top of the account? Or do you mean your fund's expense ratio? Either way, 0.05% is very low. At that point, there are other things to worry about.

(Heh, Jim beat me to it.)

[cooliemae]

Originally Posted by jIM_Ohio

are you referring to fund expenses or plan expenses?

I pay no plan expenses
I pay around .5% in fund expenses.

The only expense I have, though I really don't tangibly see it, is the 0.05% expense ratio.

[creditcardfree]

That is a very good expense ratio. Vanguard has funds as low as 0.18%.

[jIM_Ohio]

Originally Posted by cooliemae

The only expense I have, though I really don't tangibly see it, is the 0.05% expense ratio.

where do you see the expenses?

If you are looking at account balance, and see a .05% fee, then that is a plan fee, not an expense ratio.

If you are reading a fund prospectus, and it says fund expenses are .05%, then that is an expense ratio.

[aida2003]

Originally Posted by cooliemae

The only expense I have, though I really don't tangibly see it, is the 0.05% expense ratio.

If it's really expense ratio you're talking about, my only guess is that your 401k plan uses all Institutional class funds or that you're a FED employee. I heard that federal employees have dirt cheap funds.
If my aforementioned statements don't fit your profile, then my guess is that you're talking about admin expense.
E.g. I pay nothing for my 401k administering. My co. picks the tab, but my DH 401k has admin exp. He's got mostly Vanguard funds in it: some Investor, some Admiral and a couple of Institutional class funds.

As regards to the expense ratio, that kind of exp. is in a NAV. At the end of a trading day, that expense is deducted from your fund for all its shareholders before calculating the NAV, so you never see it.

[cooliemae]

If it's really expense ratio you're talking about, my only guess is that your 401k plan uses all Institutional class funds or that you're a FED employee. I heard that federal employees have dirt cheap funds.

You guessed it, I'm a FED. And while the funds may be cheap, they do come at a cost of some inflexibility in moving money around the funds.

[humandraydel]

The TSP (Thrift Savings Plan) is widely regarded as one of the best retirement plans around, due to it's extremely low cost index funds. There is nothing cheaper. As far as the restrictions on moving your money around, that is normal - most retirement plans have some restrictions.

[aida2003]

Originally Posted by cooliemae

You guessed it, I'm a FED. And while the funds may be cheap, they do come at a cost of some inflexibility in moving money around the funds.

Good for you . But instead of playing a cat and a mouse, you'd've been upfront and say you work for federal gov't.