Watch That 401K

I was really spoiled when I was in the military using the TSP retirement plan. Ultra low expense ratios on the funds (sometimes as low as 1.5 basis points, or 0.015% (compare to Vanguard at ten times that cost, much less a typical plan at 100 times that cost.) Even better, there were no additional fees. My current 401K has only one index fund with a reasonable expense ratio, which I can deal with given the other options I have in our Roth IRAs and the TSP. What I really dislike are the non-disclosed nonsense fees which get added on regularly.

I was looking at my account the other day and was surprised to see that since I started making contributions to this account in March that I’ve already paid two “recordkeeping” fees and two “accounting/misc service” fees. The amount of money isn’t much (there isn’t much in the account yet) but percentage wise, it basically doubles the expense ratio of the fund I’m in. I guess I would be okay with these small fees (I’d pay far more in even a cheap 529 plan) if they would have disclosed them.  As you might imagine, I actually read my 401K plan document that the company is required to give me, and it doesn’t mention these fees.  I wonder if there are more to come.

A larger issue I had with the 401K was that my first contribution this year was mistakenly put into someone else’s account.  It took me a few months to realize it.  It was rapidly corrected as you might imagine, but if I had never said something, I’m convinced they would have never noticed.  It was well over $3K, not exactly chump change.  I mentioned it to a few of my partners.  They all said, “Wow, I never even look at that stuff.”  Moral of the story?  Keep an eye on your money lest it disappear into the electronic ether, especially when you first start a 401K or when withdrawing or borrowing money from it.  If something doesn’t look right, it probably isn’t.