Sunday, June 21, 2009

Do You Know Your 401(k) Expenses?

I had a meeting this week with a company who had no idea that his insurance company vendor was paying a subsidy to the Third Party Administator. How do you know if you are getting good value if you can’t account for all the expenses?

I also noticed that the State of Alabama cancelled their deferred Compensation arrangement with Nationwide, and wanted to pass along the following comments:

1) The State Personnel Board cited a lack of financial transparency Wednesday when it canceled a contract with Nationwide Retirement Solutions to provide a deferred compensation plan for active and retired state workers in Alabama.

2) “We’ve leaned over backward to ask these people to come square,” board Chairman Joe Dickson of Birmingham said.

3) Board members say they were unaware the 1994 agreement provided for Nationwide, based in Columbus, Ohio, to make large payments to ASEA. The association’s tax returns show those payments have reached almost $6 million since 2002, board attorney Alice Ann Byrne said Wednesday.

If you are in charge of a 401(k) plan, be sure to ask - in writing - for a total list of fees associated with your plan. Not only is it in the best interest of participants, but it’s good business, as well.