TD Ameritrade’s free 401(k) fee analyzer tool powered by FeeX shines
a light on fees
OMAHA, Neb.--(BUSINESS WIRE)--
An eye-opening new TD
Ameritrade survey of 1,000 investors shows that 96 percent of people
know how much they pay each month for streaming media services like
Netflix, Hulu and Spotify and yet just 27 percent know how much they’re
paying in fees on their 401(k) accounts. The vast majority either may
mistakenly believe they don’t pay any 401(k) fees (37 percent), don’t
know if their plan has fees (22 percent), or don’t know how to determine
the fees (14 percent). The hard truth? 401(k) plans aren’t free; about
95 percent of 401(k) participants are paying administrative and other
fees in addition to fund fees.1
“While often overlooked, fees can put a drag on investment performance
and impact portfolio value over the long term,” says Matthew
Sadowsky, director of retirement and annuities at TD Ameritrade. Not
only do the funds inside of a 401(k) plan charge ongoing fees, but there
is also an overall cost to administer the plan. Many employers pass
some, or all, of those costs on to plan participants. Sadowsky adds, “It
can be onerous to read through all the disclosure information and
documentation to understand the fees, but just because it’s hard to
decipher doesn’t mean those fees don’t exist.”
Since 401(k)s are a cornerstone of American retirement savings, with
their tax advantages and other benefits, employees should continue to
take advantage of 401(k)s to their fullest while becoming more aware and
empowered about their accounts. That’s why TD Ameritrade has teamed with
FeeX, Inc., a fintech pioneer in fee transparency, to help retirement
savers quickly analyze their 401(k) fees.
“This is a first,” Sadowsky says. “We believe TD Ameritrade is the first
financial services company to provide 401(k) owners with such
transparency into their plan fees, and in such an accessible, customized
way.”
Clients and non-clients alike now have access to a free 401(k)
fee analyzer tool powered by FeeX to get quick insight into their
401(k), 403(b) or other defined contribution plans. The tool analyzes
overarching administration fees, as well as individual fees for the
mutual funds within the plan, so that individuals are looking at a
detailed view of their specific investment holdings and plan services
fees. Users can then clearly see an objective, side-by-side comparison
of the fees associated with their 401(k) account(s) versus other
potential fees in a IRA. There of course are other important
considerations in making a rollover decision.
Infographic - How the tool works
TD Ameritrade’s survey found that nearly three-quarters of 401(k) owners
left an account behind at an old job and ended up choosing one of three
paths:
-
Roll it over to a qualified account (new employer plan or IRA)
Nearly
one-third of Americans (31 percent) with an old 401(k) account roll it
into a new employer’s plan while slightly more (34 percent) choose an
IRA. When deciding between the two, it’s important to consider fees
and investment options. The common belief is that all 401(k) funds
have institutional pricing that's cheaper than those available to
individual investors, which is not always the case. Oftentimes,
similar securities with comparable holdings can be found in the public
markets at a lower fee. Relative to 401(k)s, IRAs can often offer a
wider variety of investments, tools and other resources such as branch
locations. And, if more than one 401(k) is involved, consolidating
multiple accounts into a single IRA can make it easier to monitor and
manage progress toward retirement goals.
-
Leave it be
The 22 percent of 401(k) owners who keep the
account with their original employer may want to compare the fees and
features of their plans versus those of an IRA.
-
Cash it out
Thirteen percent of 401(k) owners cash out
their 401(k) accounts when leaving a job. And yet, financial
professionals often say this should be a last resort for people not
yet of retirement age, as investors can incur tax consequences
including penalties, and sabotage years of retirement savings when
cashing out before they are eligible for the tax advantages involved
with this type of investing. Investors should take time to educate
themselves and fully understand the implications if considering this
option.
About TD Ameritrade Holding Corporation
TD Ameritrade
provides investing
services and education
to more than 11 million client accounts totaling more than $1 trillion
in assets, and custodial
services to more than 6,000 registered investment advisors. We are a
leader in U.S. retail trading, executing more than 700,000 trades per
day for our clients, nearly a quarter of which come from mobile devices.
We have a proud history
of innovation, dating back to our start in 1975, and today our team
of 10,000-strong is committed to carrying it forward. Together, we are
leveraging the latest in cutting edge technologies and one-on-one client
care to transform lives, and investing, for the better. Learn more by
visiting TD Ameritrade’s newsroom
at www.amtd.com,
or read our stories at Fresh
Accounts.
Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org)/SIPC (www.SIPC.org).
TD Ameritrade and FeeX are separate and unaffiliated companies that are
not responsible for each other's services or policies. Neither TD
Ameritrade nor FeeX is acting in the capacity of an advisor or making
recommendations to TD Ameritrade clients or potential clients in
connection with the 401(k) fee analyzer tool. The tool is for
self-directed investors, for educational purposes only.
Before rolling over a 401(k) to an IRA, be sure to consider your other
choices, including keeping it the former employer’s plan, rolling it
into a 401(k) at a new employer, or cashing out the account value
(keeping in mind that taking a lump sum distribution can have adverse
tax consequences). Whatever you decide to do, be sure to consult with
your tax advisor.
Source: TD Ameritrade Holding Corporation
1) FeeX 2016 proprietary data assembled from 401(k) fee
disclosures: An evaluation of 81.4 million 401(k) plan participants
determined that 77.5 million, or about 95 percent pay participant fees.

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Source: TD Ameritrade Holding Corporation