As an employee What 401(k) Docs Should I be Familiar with?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
paulsalem
Posts: 117
Joined: Mon Feb 06, 2017 11:26 am

As an employee What 401(k) Docs Should I be Familiar with?

Post by paulsalem »

As an employee with Megacorp with a 401(k) with T. Wroe, what official plan documents should I be familiar with? I have the Plan Summary Document but that is lacking many details, and I had to request it via phone call, as it's not published on my HR site or my T Rowe site.

I'm looking for exact details of all fees mainly, but I also don't know what I don't know and would like to learn more.

Thanks.
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by retiredjg »

The fee information may only be on the website. That is what you need in addition to the SPD.
User avatar
mhc
Posts: 5257
Joined: Mon Apr 04, 2011 10:18 pm
Location: NoCo

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by mhc »

You could also look for the features necessary to do a mega-backdoor Roth.

I would recommend reading through all the material at least once each time you get a new plan. Different plans have different features that may or may not be relevant to your situation.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
User avatar
Artsdoctor
Posts: 6063
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by Artsdoctor »

I'm not an expert on 401k fee schedules but there seems to be a history of:

Impossible fees to categorize (several years ago) followed by easily listed fees (a few years ago) and now fees that can be requested but not easily found.

We have a Hancock 401k which is dreadful and will soon be ending. Years ago, the fees were outrageous (about 3-4% all-in) and the administrator actually denied that there any fees at all. Then, fees were on each quarterly statement and they had decreased significantly. Now, there's nothing on the statement, the administrator doesn't know, Hancock wouldn't tell me, and only after the administrator called did we get an answer (0.6% all-in).

For you, I'd start with your HR department since it's a large corporation and they probably have the fee schedule at their fingertips. If you ask for "all-in" fees, they should tell you everything it will cost. However, my own experience has taught me that many people just don't know what they're talking about so ask for both "all-in fees" and then each itemized class of fees. If they don't know, ask them to get the information in writing. They cannot deny your request.

Unfortunately, it's also been my experience that you'll have to keep up with this since fees can change. What you find out now may not be accurate in a year. You can meet with HR and ask that all fees are listed on statements--they usually do have that power to make it happen if they really want. Short of that, after you get this year's printout of every fee and it becomes apparent that no fees will be listed on statements, just say, "thanks and I'll see you next year."
User avatar
retired@50
Posts: 12821
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by retired@50 »

paulsalem wrote: Thu Sep 23, 2021 3:27 pm what official plan documents should I be familiar with?
...
I'm looking for exact details of all fees mainly, but I also don't know what I don't know and would like to learn more.
Searching for Form 5500 at the U.S. Department of Labor can be eye-opening. Each 401k plan files the form annually.

See link: https://www.efast.dol.gov/portal/app/di ... ution=e1s1

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Lionel Hutz
Posts: 379
Joined: Sat Jan 30, 2021 12:18 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by Lionel Hutz »

Very generally speaking, fees can be in the form of the mutual fund expense ratio or a plan fee.

Expense ratio of course depends upon the funds offered in the plan and the funds you choose. Megacorps tend to negotiate for low ERs but not always.

Plan fees can be an annual maintenance fee, and also specialized fees for specific transactions: loan, hardship withdrawal, QDRO. All specific to your plan.

Those are set by the plan and can’t be changed or waived typically. In truth, they are fees the 401k company charges the employer to run the plan. The employer may pay for some or all of the fees themselves, or they may pass some or all fees onto the individual participant. Again a generalization but fees tend to be lower the larger the company you work for.
an_asker
Posts: 4903
Joined: Thu Jun 27, 2013 2:15 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by an_asker »

retired@50 wrote: Thu Sep 23, 2021 4:25 pm
paulsalem wrote: Thu Sep 23, 2021 3:27 pm what official plan documents should I be familiar with?
...
I'm looking for exact details of all fees mainly, but I also don't know what I don't know and would like to learn more.
Searching for Form 5500 at the U.S. Department of Labor can be eye-opening. Each 401k plan files the form annually.

See link: https://www.efast.dol.gov/portal/app/di ... ution=e1s1

Regards,
Wow! I downloaded the last decade's worth of my company's filings. Should be interesting to understand and read through :-)

Thanks!
User avatar
retired@50
Posts: 12821
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by retired@50 »

an_asker wrote: Thu Sep 23, 2021 6:47 pm
retired@50 wrote: Thu Sep 23, 2021 4:25 pm
paulsalem wrote: Thu Sep 23, 2021 3:27 pm what official plan documents should I be familiar with?
...
I'm looking for exact details of all fees mainly, but I also don't know what I don't know and would like to learn more.
Searching for Form 5500 at the U.S. Department of Labor can be eye-opening. Each 401k plan files the form annually.

See link: https://www.efast.dol.gov/portal/app/di ... ution=e1s1

Regards,
Wow! I downloaded the last decade's worth of my company's filings. Should be interesting to understand and read through :-)

Thanks!
Yeah, it'll take some time to get familiar with the document. This isn't a document that many 401k participants ever bother with, but I suppose it's public record for good reason. Hopefully you don't run into any surprises.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
HomeStretch
Posts: 11417
Joined: Thu Dec 27, 2018 2:06 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by HomeStretch »

There is a 401k full plan document. This is the definitive plan document. If your MegaCorp is a public company, it should be filed as an exhibit to its Form 10-K. You can find the Form 10-K at sec.gov or there may be a link on the investor page of your company’s website.

There is a Summary Plan Document (SPD) which summarizes key elements of the full plan document. The SPD must be provided to new participants, to all participants when there is a material change to the plan or upon request. This can be by mail but often there is an email to participants with an electronic link to the document.

There is an Annual Report (AR) that must be provided to new participants and to all participants annually in a similar distribution manner as the SPD. The AR contains certain information (such as plan assets) summarized from the Annual Form 5500 and references where you can find the full Form 5500 (also see retired@50’s post).

There is an annual Fee Disclosure (FD) that must be provided to new participants and to all participants annually in a similar distribution manner as the SPD and AR. The FD provides the current fund expense ratios and administrative/other fees that may be charged to participants’ accounts in various ways (for example, as a % of the participant’s fund balance, as a $ amount per month/quarter/annually, fee for an event such as a loan or distribution, etc.).

There are other notices that are required to be sent to participants within a prescribed number of days when certain events happen such as changes to available funds, change in provider, termination of a plan, etc.
an_asker
Posts: 4903
Joined: Thu Jun 27, 2013 2:15 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by an_asker »

retired@50 wrote: Thu Sep 23, 2021 6:52 pm
an_asker wrote: Thu Sep 23, 2021 6:47 pm
retired@50 wrote: Thu Sep 23, 2021 4:25 pm
paulsalem wrote: Thu Sep 23, 2021 3:27 pm what official plan documents should I be familiar with?
...
I'm looking for exact details of all fees mainly, but I also don't know what I don't know and would like to learn more.
Searching for Form 5500 at the U.S. Department of Labor can be eye-opening. Each 401k plan files the form annually.

See link: https://www.efast.dol.gov/portal/app/di ... ution=e1s1

Regards,
Wow! I downloaded the last decade's worth of my company's filings. Should be interesting to understand and read through :-)

Thanks!
Yeah, it'll take some time to get familiar with the document. This isn't a document that many 401k participants ever bother with, but I suppose it's public record for good reason. Hopefully you don't run into any surprises.

Regards,
Thanks again!

I am curious what kind of surprises there might be in this document that's not in the Summary Plan Description already and/or in the fees that I see coming out of the 401k statements?

This is not actionable (but definitely a fun exercise): I went back a decade into my plan forms (using the above link) and found a couple of interesting things:

- year end number of participants with balances went from about 4000 in 2009 to about 8000 in 2019 (2020 form ain't available yet)

- the average plan balance (total balance divided by above number) went up by a factor of 3 (not a whole lot, if you ask me - especially if I compare my 2009 plan balance vs 2019 plan balance). Is there a good explanation - other than folks are not saving much? The plan investment options, while not being top of the line, are definitely way better than they were in 2009. We went from 1.xx% ERs to < 0.5% ER (of course, there are some funds with higher ERs but there at least is a choice)!
User avatar
retired@50
Posts: 12821
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by retired@50 »

an_asker wrote: Fri Sep 24, 2021 9:00 am I am curious what kind of surprises there might be in this document that's not in the Summary Plan Description already and/or in the fees that I see coming out of the 401k statements?
It may depend on the 401k provider, but when I was looking into one plan in particular, there was a name and an annual compensation amount for the "salesperson" from the insurance company who administered the plan.

This kind of information can be revealing if you recognize the name as a friend of the CEO or something along those lines. It's not far-fetched to think that a company CEO might be steering business to his brother-in-law or some old college buddy. There isn't necessarily anything wrong here, unless the fees are high, and the company plan fiduciary hasn't really acted in the best interest of the plan participants.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by retiredjg »

an_asker wrote: Fri Sep 24, 2021 9:00 am - the average plan balance (total balance divided by above number) went up by a factor of 3 (not a whole lot, if you ask me - especially if I compare my 2009 plan balance vs 2019 plan balance). Is there a good explanation - other than folks are not saving much?
I would imagine this is the result of larger balances being rolled out to IRA as people retire and new beginning plans starting each year.
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by retiredjg »

I have heard that the full document is often hundreds of pages in length. Let us know what you find out. I'd be surprised if there is anything significant in there that is not in the Summary Plan Document. Should not be any surprises.
exodusNH
Posts: 10344
Joined: Wed Jan 06, 2021 7:21 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by exodusNH »

paulsalem wrote: Thu Sep 23, 2021 3:27 pm As an employee with Megacorp with a 401(k) with T. Wroe, what official plan documents should I be familiar with? I have the Plan Summary Document but that is lacking many details, and I had to request it via phone call, as it's not published on my HR site or my T Rowe site.

I'm looking for exact details of all fees mainly, but I also don't know what I don't know and would like to learn more.

Thanks.
Depending on how the plan was setup, the 401k fees might be paid via higher-ER funds. If you see any mutual funds with an ER < 0.10%, they're not doing that. That means they're either paying the fees on your behalf or they're being deducted from your fund balances quarterly.

401k fees vary wildly. There are fees just for having a plan, as there's documentation / filings that need to happen. Then there are per-participant fees. Sometimes these are flat fees. Other times, they're % based.

You might then have an advisor fee on top of that. Some companies bring in external advisors to make sure the plan is satisfying legal requirements; by bringing in external people, if a participant sues the plan, the responsibility can be shifted to the the advisor.

This is all documented somewhere, but can be hard to find because people don't often request the information.

If you've been with the company for at least a full quarter, look at your transaction history. If there are any sales that you didn't make, that's the plan pulling the fees out of your accounts.
HomeStretch
Posts: 11417
Joined: Thu Dec 27, 2018 2:06 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by HomeStretch »

The full plan document is the “definitive” plan document. It is long and technical in parts. If there is anything contradictory or erroneous in the Summary Plan Description, the full plan document has the final “say”. Most participants aren’t going to get much out of reviewing the full plan document or the Form 5500 for a defined contribution plan. Most focus on the SPD and fee disclosure. But it’s good to know the documents that are out there for the plan.
User avatar
Plano
Posts: 69
Joined: Sun Nov 03, 2019 3:21 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by Plano »

HomeStretch wrote: Fri Sep 24, 2021 3:58 pm The full plan document is the “definitive” plan document. It is long and technical in parts. If there is anything contradictory or erroneous in the Summary Plan Description, the full plan document has the final “say”. Most participants aren’t going to get much out of reviewing the full plan document or the Form 5500 for a defined contribution plan. Most focus on the SPD and fee disclosure. But it’s good to know the documents that are out there for the plan.
It's a bit more nuanced under ERISA: when there is a conflict between the SPD and the plan instrument, the document more favorable to the employee is the one that controls. Generally speaking, the SPD cannot take benefits away, but it can be construed as an amendment to the plan in order to grant greater benefits. Exceedingly dry subject matter, but in case anyone wants to read more, start with Cigna Corp. v. Amara, 131 S.Ct. 1866; 179 L.Ed.2d 843 (2011).

Re: the OP question, I would not ask your employer or HR. They may not know what you mean. Instead log on to the administrator's website, navigate the "documents" tab, and download the fee schedule and your last quarterly statement for comparison. If you cannot find it, call the 800# on the website. They get this type of call all the time, especially since the John Oliver video on 401k fees went viral.
an_asker
Posts: 4903
Joined: Thu Jun 27, 2013 2:15 pm

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by an_asker »

retiredjg wrote: Fri Sep 24, 2021 10:23 am
an_asker wrote: Fri Sep 24, 2021 9:00 am - the average plan balance (total balance divided by above number) went up by a factor of 3 (not a whole lot, if you ask me - especially if I compare my 2009 plan balance vs 2019 plan balance). Is there a good explanation - other than folks are not saving much?
I would imagine this is the result of larger balances being rolled out to IRA as people retire and new beginning plans starting each year.
Does the plan balance on these forms typically include after tax contributions as well? And rollovers in? Or is it strictly the 401(k) contributions?
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: As an employee What 401(k) Docs Should I be Familiar with?

Post by retiredjg »

I would think "plan balance" would mean all the money in the plan, unless defined otherwise.
Post Reply