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.

 

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With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.