I am 44, married and have a small family. I have been in government service for 15 years. I make about $ 41,000 per year at Tech Home ($ 3,416.00 / month) after all deductions and savings.
I contribute মাসে 2,053 per month to three employer accounts (defined contributions, supplementary annuity and deferred compensation plan 401 (a). I just started to see my fees and I’m a little shocked. I am investing in a variety of low-fee domestic ETFs outside of my employer-sponsored account.
Do I need to add tax benefits at the time of retirement to continue to pay management fees on this plan, or should I add to the low-fee ETFs that I am investing in? Is there another way to discuss fees with an employer-sponsored retirement plan?
Savings for 12 months Investment for 11 months
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It’s great that you’re seeing fees in your retirement account – if not managed properly, they can really eat your home’s eggs.
I can’t dive deeper into your personal situation, especially since I don’t have the exact details of your retirement plan in front of me, but you asked an interesting question and I know others were surprised. Does it make sense to choose an external account, such as an IRA or a taxable brokerage account, where your portfolio has more control over your portfolio, over an employer-sponsored account, such as 401 (k)?
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You mentioned that you have three different employer accounts (a gift in itself, honestly!) And the only one you can really do something about is contribute $ 600 a month. My first question to you is: would contributing সেই 600 to that plan make a huge difference to your calculated 2,164? Try to be very gracious about the details of the account and review what charges are charged on each plan. You can see that the 401 (a) fee isn’t really that bad and the amount of fee you pay each year won’t change dramatically if your $ 600 contribution is deducted.
All retirement plans – from the private sector or the government – have their own set of rules, so it’s hard to say whether you can really make a difference. Large companies offer lower retirement fees than smaller businesses. For example, a 401 (k) plan with 100 participants and an average fee of $ 50 million assets in 2021 was 0.90%, compared to a small plan with 100 participants and সম্প 5 million assets with an average of 1.20%, the average book according to 401k, which is the fee for these accounts. Tracks and compares. Employees cannot discuss fees with their employer. Fees are decided between the employer and the retirement plan provider.
These plans may have investment choices that you can change, but this is something you need to discuss with your plan sponsor. Someone at HR may be able to help you understand this information, or from the investing company housing these accounts, sending you important planning documents that are available, describing when changes are allowed and how to navigate the system.
See the MarketWatch column “Retirement Hacks” For practical advice on your own leisure savings journey
I would say – it’s nice to have an investment account other than these plans, but there are many reasons why you might want to stick with a $ 600 contribution to an employer-sponsored retirement account. 401 (a) allows for the employer’s contribution, which is similar to the employee’s contribution, so that it is essentially like “free” money if it is awarded. No employer matches the brokerage account or your general IRA.
I’m not sure where you’re investing in these ETFs, but if it’s in the IRA, keep in mind that your contribution will be limited. The maximum annual contribution to the IRA for persons under the age of 50 is 6,000. But your $ 600 contribution per month is equivalent to 7,200 a year, which means you’re off $ 1,200 contribution if you’re in IRA.
Although there are many tax benefits for IRA. Your participation in employer-sponsored accounts may not qualify you for a tax deduction with a traditional IRA, but you can contribute to the pretax of these accounts, which is great if you have less tax bracket than you expect. With the Retirement Chariot IRA, you will now pay tax on your contributions and deduct tax-free withdrawal benefits at retirement, an advantage if you expect to be in a lower retirement tax bracket (or you think the government will increase the tax rate when you get there). )
However, investing in an additional account will greatly help you in old age when you are already participating in an employer-sponsored plan.
When you are doing your analysis, I suggest you to review how your ETFs are actually doing. Fees are important, but so is the performance and suitability of investing in your portfolio. Don’t worry if your portfolio doesn’t do particularly well right now – it’s a small thing to say stock market volatility over the last few months – but check your investment preferences to make sure they fit your goals and needs, and that they work for you in the long run. Is working best.
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