Economy
Related: About this forumAs brokers urge IRA rollovers, ex-workers ditch their low-fee federal retirement plan
As brokers urge IRA rollovers, ex-workers ditch their low-fee federal retirement planAugust 15 at 10:49 AM
John Turner suspected that brokers were encouraging federal workers to ditch their top-flight retirement plan. So he went undercover.
The former Labor Department economist called representatives at companies such as Bank of America, Charles Schwab and Wells Fargo. He identified himself as a potential client grappling with what to do with his own nest egg.
Turner thought he knew the answer: Leave it alone. As a legacy of his government service, he kept his money in the Thrift Savings Plan, considered the gold standard of 401(k)-type programs for its rock-bottom fees. Yet all but one company told him to roll over all his money into individual retirement accounts. On average, stock funds charge almost 50 times what the government plan does.
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Turner, an economics PhD from the University of Chicago, worked more than 20 years for the Labor Department and Social Security Administration before heading the Pension Policy Center.
exboyfil
(17,865 posts)Well done.
An interesting quote.
"Vanguard Group, known for its low-cost index funds, stood out for a more balanced approach, Turner said. The companys representative asked about Turners tolerance for risk, he said. If it were low, the representative told Turner, he should stay with the government-guaranteed fund. Otherwise, Vanguard could be a better choice."
mahatmakanejeeves
(57,567 posts)I was turned on to them by a coworker long ago. Vanguard is well known for its low fees.
I wish I could have put this article in LBN, to ensure greater exposure. It looks as if the article will run in this Sunday's Washington Post.
exboyfil
(17,865 posts)but went to Fidelity when my employer changed. Vanguard is the best as far as I am concerned. Fidelity is not bad if you keep an eye on them.
elleng
(131,051 posts)and I'm glad my husband didn't do it. He stuck with TSP, and did very well. (I should say, his beneficiaries, our daughters, did.)
TSP enables/encourages employees to diversify, and we/they can use all tools available to learn what's best for us/them.
https://www.tsp.gov/investmentfunds/shareprice/sharePriceHistory.shtml
'The Labor Department has said it will propose rules in January that brokers and other advisers act in clients best interest during rollovers, what is called a fiduciary standard. Brokers are generally held to the lower standard of selling products that are suitable for their customers, meaning they dont have to put their clients interests first as long as they select appropriate investments.'