Vanguard 401K Review

Vanguard 401K account review: IRA fees, plan rates, retirement investment options, mutual funds selection, pros, and cons.

Vanguard and 401K Options

The strength of the institution where you invest for retirement is one of the major considerations in the decision making process. Specializing in Electronic Trade Funds (ETF), Vanguard has total assets of $2.2 trillion of which U.S ETF funds account for $325 billion. Vanguard offers numerous options along with the ETFs. One of the plans is the 401K.

Numerous methods for contacting Vanguard

Like most financial institutions Vanguard has many methods available for communication.

1. Web support

- Allows for 24/7 account management

- Transfer funds

- Monitor balances

2. Phone support

- Automated services

- Numbers are separated by Department

- Extensive hours for Live Customer Support

- Number is available for web technical support

3. Email

- Not for an immediate response. Time frame is 48 hours for a return call.

- Does offer an encrypted e mail format

One access which appears to be lacking is the ability to live chat. A website (admittedly may be sponsored by a live chat business) is now up asking for votes to suggest Vanguard establish a live chat option.

Vanguard offers many savings options dependent upon investments

Vanguard offers a multitude of investment options. Each plan has a varying annual investment limit. A 401K plan allows for an individual investment of $17,500 annually. Individuals over 50 dependent on finances may have the option of contributing an additional $5,500 which has not changed since 2008.

Things to consider when selecting a 401K for small businesses

It is estimated the cost of establishing a 401K for employees is $1,800. This is in addition to the administration fee of $20 to $25 per employee.

Fees and expenses-AARP has estimated that 80% of contributors were unaware of the fees associated with the account. It is estimated that 30% of 401K contributions can be lost to fees.

Options offered:

- Penalties for withdrawal

- Asset protection from creditors

- For employers consideration must first be given to the employees.

- Is there enough employee interest?

- What is the total cost to administer?

The attached link has suggested questions prior to starting an employee 401K option.

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Not just one 401K solution

Vanguard offers many options for investing in a 401K. The selection will be based upon the investor’s current employment situation.

1. 401K contributions from a Corporate Employer

Employees benefit from a corporate match. Investing with the corporate 401K will often lead to an employer match. This adds a percentage to the employee contribution. Corporate matches vary widely from institution to institution and are often limited to a certain percentage of the employee’s income. (IE The corporation will match x% of x % of the employee’s salary.)

2. 401K contributions for small business owners

- Assets must total a minimum of $20 million

- Record keeping fees vary and are based upon the number of participants’ not total assets.

- Rules generally require if this plan is offered it must be offered to all employees over 21 working over 1000 hours the previous year.

- Maximum annual contribution limit for 2019 is $52,000-$17,500 from the employee

- Can be deducted as a business expense.

3. 401K contributions for individuals

- Allows for contributions as an employer or employee

- Allows for deferred taxation

- Owners of small businesses qualify as long as the employees are family members

- Fees are reasonable at the current rate of $20.00 per year per account. This fee may be waived if a member is enrolled in other programs. Check the following link for details. This is a valuable benefit as it has been estimated fees could potentially wipe out 30% of your savings by retirement. This is according Kiplinger

- Maximum annual contribution limit for 2019 $52,000-$17,500 from employer

Latest data indicates that with the individual Vanguard 401K loans are not permitted. This may or may not be an issue with the investor.

Types of 401K available through Vanguard

- Corporate

- Small business plan-assets of $20 million

- Individual 401K-for individuals or family owned businesses

Benefits of a 401K

- Allows the individual to determine the amount he can save

- Allows for deferred tax compensation

- Allows trained employees a benefit that may increase tenure

- Employees can generally select the funds for investment and change the portfolio as the situation dictates

Things to consider

For the organization-The fee for starting a 401K plan is $1,800 plus participant fees.

Are the fees associated reasonable? Fees can be responsible for depleting your savings a total of 30% during its life. Vanguard fees are reasonable for the small business plan at $20 per participant. America lacks in preparing for the financial future. The average savings for those over 55 is $152,000. Sadly that equates to only three years at the median income of about $52,000. A 401K gives a savings option regardless of life stage.

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Vanguard 401K reviewed by Rating: 4