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Are 401(k) plan fees more expensive than rolling over to an IRA?

I am considering moving my 401(k) assets from a previous employer into an IRA account. Are the underlying investment options and administrative fees for 401(k) plans a more or less expensive option than investing through an IRA account?

Jan 04, 2012 by Jean from San Diego, CA in  |  Flag
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9 votes

Jean this is an excellent question. The answer is that it depends. Many larger company 401(k) plans offer a menu of solid, low cost options with relatively low administrative costs due to their size and buying power. This is not universal to all large plans and many smaller and mid sized plans also offer solid options with relatively low expenses. You will really need to do a review of your former employer's plan. The 401(k) fee disclosures due to commence later this year might be of help to you in this effort.

On the flip side an IRA account can offer you more options and may be lower cost, esecially if you avoid banks or brokers that charge excessive fees and offer only higher cost funds, often with sales commissions involved. Best to look at fund supermarkets like Schwab, Fidelity, TD, and possibly Vanguard if doing this yourself.

View all 4 Comments   |  Flag   |  Jan 04, 2012 from Arlington Heights, IL
Roger Lawrence Wohlner

Ryan certainly BrightScope is an excellent starting point for an overview, assuming the plan is rated. Beyond that sources like Morningstar and Yahoo Finance are good places to do a review of the funds offered by the plan. If the investment options are not mutual funds or ETFs, it might be difficult to research them. An example could be a group annuity plan offered via an insurance company.

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Flag |  Jan 04, 2012 near Arlington Heights, IL
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