A Secret to Share

BY GARY POKRASSA

As a follow-up to Ken Weber’s Checklist, “ Dirty Little Secrets of 401(k) Plan Fees ” (May 07, page 34), I had noticed the expense ratios as disclosed for the fund choices in my company’s 401(k) plan were significantly higher than the expense ratios for the same funds available to the public.

On inquiry, it seems the 401(k) plan was purchasing Class N shares with a higher expense ratio, compared with Class A shares, which the general public would purchase.

When I told the financial adviser the expense ratios were too high, I was told there is nothing that could be done. They were wrong.

I am now in the process of switching my company’s plan to a different financial adviser, who is allowing us to access all Class A shares and have a fee explicitly charged, which, on balance, will net out to a savings of about 40 basis points. I believe we will have better performing funds, in addition.

Please advise the readership to be on the alert for these different share classes with higher expense ratios.

Gary Pokrassa, CPA
Ronkonkoma, N.Y.

 

SPONSORED REPORT

How the election may affect taxation of business income

This report summarizes recent proposals to reform the U.S. business income tax system and considers the path to enactment of any such legislation.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

Did you follow 2016’s biggest accounting news?

CPAs will remember 2016 as a year of new standards and new faces. How well did you follow the biggest accounting events? The 7 questions in this quiz will help you find out