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 to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

QUIZ

News quiz: Scam email plagues tax professionals—again

Even as the IRS reported on success in reducing tax return identity theft in the 2016 season, the Service also warned tax professionals about yet another email phishing scam. See how much you know about recent news with this short quiz.