Ask an author: David Loeper here to answer your retirement planning questions!

[jusrme]

Originally Posted by David Loeper

The daily declines are the daily accrual of the plan service fee that are reported to you monthly.

You notice that when the fee comes out at the end of the month, there is not an offset of a corresponding amount of decline in shares (because they have been accrued each day of the month.) That $1.04 fee would be about 0.08 shares, but the decline between days is only around 0.002.

You are correct the fees add up and effect the quality of your life. At least your statements show these expenses. Many plans hide a number of the fees from participant statements.

Actually, the statements do not show any of those fees. I only know of the Plan Service Fees from looking at the detailed transaction history online. The statements do not show any fees and the "money-out" part is zero unless I have transferred money out of a fund. So unless I go online and look into the detailed history I would not know about those fees from the statements. Statements show opening balance, closing balance, money-in, money-out, gain/loss and number of shares/units. Likewise, I would not know that my shares/units have decreased unless I physically pulled out a previous statement and compared them.

[David Loeper]

Originally Posted by jusrme

Actually, the statements do not show any of those fees. I only know of the Plan Service Fees from looking at the detailed transaction history online. The statements do not show any fees and the "money-out" part is zero unless I have transferred money out of a fund. So unless I go online and look into the detailed history I would not know about those fees from the statements. Statements show opening balance, closing balance, money-in, money-out, gain/loss and number of shares/units. Likewise, I would not know that my shares/units have decreased unless I physically pulled out a previous statement and compared them.

Well, at least the accounting is exposed on your website detailed transaction info. There are a lot of people where fees such as yours are not exposed at all.

[mcstarrett]

Hello,

I recently switched employers and rolled over my 401k to my new employer without really thinking about it. I now wonder if it might be possible to rollover that rollover to an outside institution such as Ameritrade?

[Will]

Hi guys!

This week, the lucky winners of David's book are amyschiff and Kathryn.

We're giving away two copies of the book per week so there are plenty of chances to win.

[David Loeper]

Originally Posted by mcstarrett

Hello,

I recently switched employers and rolled over my 401k to my new employer without really thinking about it. I now wonder if it might be possible to rollover that rollover to an outside institution such as Ameritrade?

It is very likely that you are going to be forced to leave it in the plan, which isn't all bad because at least you will have the option in the future of taking loans against it.

There are a few plans that permit for in-service distributions from rollovers from prior plans at any time (you may want to review your Summary Plan Description document, or forward it to me and I will review it for you) however this is a very rare feature.

If you are stuck with the high cost funds with your new employer, the recent Supreme Court ruling that puts your employer at risk of lawsuits from individual employees should make them at least pay attention to their fees.

Create a free login at www.fundgrades.com and put your 401k alternatives into the "My 401k" option, and show your employer the grades on expenses. That could be a good motivator that they need to shop for a better deal.

You may also want to review the "Learn More" section of www.401kripoff.com that addresses issues about fees, regulations and many other topics.

[GreerAngell]

I am self employed.

[David Loeper]

Originally Posted by GreerAngell

I am self employed.

I don't know your personal circumstances or when you plan on retiring, but it is certainly not too late.

You would be surprised how much money can be accumulated over a fairly short period of time with tax advantages and proper planning.

[Will]

Hi guys!

This week, the lucky winners of David's book are KelR1 and sam12587.

We're giving away two copies of the book per week so there are plenty of chances to win.

[sast]

Dave,
Thanks for being here for us. Your advice is greatly appriciated and invaluable. I'm retiring in a year or so. My 401K is nearly 100% CVX. It has performed so well over the years, its hard to diversify. But I know its too risky to stay that way. My question is what is the right diversification mix? I know you say (I've read your white papers) over and over that we shouldn't focus on returns and risk, but I want to maintain my lifestyle, minimize my risk and maximize my return. What's the best portfolio mix?

[David Loeper]

Originally Posted by sast

Dave,
Thanks for being here for us. Your advice is greatly appriciated and invaluable. I'm retiring in a year or so. My 401K is nearly 100% CVX. It has performed so well over the years, its hard to diversify. But I know its too risky to stay that way. My question is what is the right diversification mix? I know you say (I've read your white papers) over and over that we shouldn't focus on returns and risk, but I want to maintain my lifestyle, minimize my risk and maximize my return. What's the best portfolio mix?

I'm glad you have won the market lottery with CVX, but you are right it is CLEARLY critical that you diversify. There are so many "event" risks when one has a single stock, you are essentially making a HUGE gamble.

For example, like CVX, GE has significantly outperformed the S&P over its life. It was down almost 13% yesterday because analysts over estimated its earnings.

Think about Enron, Worldcom, Bear Stearns...prior to their "events" everyone thought things were just, well...peachy.

What if OPEC massively increases production to increase volume with declining demand anticipating a protracted recession? What if their executive team dies in a plane crash? What if the nationalization in Venezuela spreads to other areas the company has significant holdings? What if they had a serious tanker accident with billions of clean up costs?

If I were you, I would take my winnings from the table and diversify. NOW.

The model allocations we offer in our company's 401k plan are available from this link:
http://www.financeware.com/ruminatio...nformation.pdf

We also have a risk tolerance/time horizon/liquidity need questionnaire that has a simple scoring model to help determine what may be a suitable allocation model for you. It was published in my book, and is also available here:
http://www.financeware.com/ruminatio...kTolerance.pdf

But, the best way to manage your resources and needs is to consider your specific goals, priorities, resources in combination. This requires some significant modeling efforts but is worth it if you truly wish to continuously make the most of your life.

You outline common sense, but competing goals. For example, if you could confidently provide for maintaining your lifestyle, with minimal risk, why would you seek a higher return that would introduce a much higher risk of jeopardizing that lifestyle?