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Have a 401K -- for a three -- retirement account you might want to listen up a majority of people who participate in these retirement plans.
Aren't even aware of the fees.
They're paying today well in new Labor Department rule that goes into effect this year.
We'll make those fees you pay more transparent Scott whole supple his pregnant.
Harlan -- he's here to help us understand how these new rules will affect you Scott welcome to you -- some good news is that.
Individual investors could save money on fees tell me more about this.
It's a -- Department of Labor as you said.
I just finalize a regulation that gives both employers and employees information about what they're actually pain.
To -- -- -- -- which sounds kind of simple but a recent survey that we actually -- of our clients.
Showed that about three quarters of them don't actually know or fully understand what they're paying for the for a long cash.
-- that's an interesting point a lot of folks don't I actually don't what I found interesting though in reading up about this is that.
If these are actually higher if you or.
At a plan provided by a smaller company vs a larger company is that true I mean is a big differentiation -- which are paying.
Traditionally smaller companies do pay more per person and our percentage wise in a larger company -- because there's fewer people to spread that around.
And I actually think that's the great opportunity here for small players because for the first time for many employers they're going to be getting this information.
And so they can use this information -- to make a comparison with other companies that are similar size and somewhere in history.
To see if there's a way for them to to save money for their employees.
You know we have -- some idea with our 401K if you're an average working person and it's virtually untouchable.
But I think generally speaking maybe it's safe to say he made clear not with me that you can negotiate east -- is the workers the plan holder you have that power correct.
You're absolutely can negotiate the fees from an employer standpoint.
There's many different providers of for a long K so it's easy to go -- get a price comparison from let's say three to five different providers.
From -- employee's perspective you when you get this information I think you should go have a conversation with your employer.
Asked them do you know for paying average -- industry in size above average below average.
-- from -- -- or above average and I think is a great way to go out negotiate those fees.
Particularly with small businesses because a lot of time Japan -- out of the assets of the plan.
Which means if you lower fees.
More money stays in your account so couple percentage points -- tenths of a percentage point rather defeat depreciation over an entire career to work -- -- considerable amount of savings.
I would imagine a small difference -- small difference can make a huge difference to -- retirement plan when you retire.
Let's annuities because the government is advocating the use of -- in 401 -- what what do you make of that.
So they're trying to make it simpler for an employer to add an annuity to a forum KR 43 -- specifically annuities.
Let's start paying you later in retirement so -- -- -- -- to save let's say for twenty years and then use that annuity for the rest of their life.
I think there's a couple things to keep in mind here.
One is the cost of the -- 32.
Is how -- stripped -- is in -- so can you move money freely within this account.
And then three what is the pay -- so how much you can get paid for the amount of money that you that you put end and how Long Will you get paid.
I think for some people -- guaranteed payout is gonna be great because it'll help them sleep longer at night.
For others I think if they review those three things -- and a little more hesitant and make me maybe take a pass.
I think if you are considering is and that's an annuity particularly within -- -- okay.
-- Smart talk to a financial advisor have them walking three.
Through all three steps to make sure you understand what's going on.
Scott is it still cardinal -- a 401K plans to date been before you're done.
For your tired he did.
It is something that we we really do advise against because.
You first you'll pay a 10% penalty on those withdrawals and you'll still pay taxes fifty -- pretax contributions.
On that so you'll end up with a lot less than you think.
And you really pulling money away for your retirement to find things right now I think you'd be much better to set up a budget that you can live within now.
So that you don't have to harm your future.
Isn't just -- total 401K savings in 2011 actually declined slightly from 2010 if I'm not mistaken.
What are your thoughts on contributions here in the new year will will -- again build up again -- do you expect them to to be to decline.
We think the new -- is actually a great great time to increase your savings -- many people gotten a raise last year.
-- so why not take it let's say your three or 5% -- want to take a percent and put its larger -- okay.
You know as we discuss the small changing -- can have a significant impact on on where you end up in retirement.
The increase -- your contributions by 1% every year can have an even bigger impact on that.
Scott -- -- thanks a lot.