401k Plan: From Bundled Fee To Explicit Fee
I received a notice from my employer about our 401k plan. The plan will soon start charging an administrative fee to employees’ accounts, estimated to be about $20 per quarter.
Until now our plan didn’t charge any administrative fee explicitly. I was able to confirm that on my 401k plan statement. See previous post Find Out How Much You Paid Admin Fees In Your 401k Or 403b.
Stable Value Fund vs Bond Fund vs CDs
CDs are better than bond funds these days even though financial advisors rarely recommend CDs. Many 401k or 403b plans include a stable value fund. How do those compare to CDs and regular bond funds?
CDs are appealing for several reasons: higher yield, principal stability, and FDIC-insurance. Stable value funds share some of the same traits with CDs but not others. There are two general categories of stable value funds. Depending on the type, a stable value fund could be a very good alternative to a bond fund offered in the plan, or it could be just so-so. » Read more …
Friday Reading: Pluralistic Ignorance
Frakt on Medicaid and the Oregon Medicaid Study by Russ Roberts at EconTalk
What a surprise to hear my former co-blogger Austin Frakt interviewed on the popular economics podcast EconTalk. Well done, Austin!
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Pay a Fee For Better Value
The word "fee" has a negative connotation. I’m not sure why when a fee is just a price tag on a service. Brokerage firms have to advertise "no fee IRAs." Credit card companies say "no annual fee." Is a no-fee product necessarily better than a product with a fee?
I see heirloom tomatoes selling for $4.99/lb at the store. I’m not that crazy about tomatoes but I don’t cry bloody murder when I see the price tag. I leave those heirloom tomatoes alone and let someone else have them. I’m sure plenty of people buy them; otherwise the store will have to throw them away every week. Those customers voluntarily pay the price because they value heirloom tomatoes.
Friday Reading: Where to Retire
One Perspective on the Best Places to Retire by Ann Carrns at New York Times Bucks Blog
I’m thinking I should just experiment with many places when I retire. Live in one place for a few months to a few years depending on how I like it. Move on to the next.
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Increase Tax Withholding On ESPP Gains
I filed my taxes in the first week of April. I received paper I Bonds on April 29, just in time to have them earn the 1.76% rate in the first six months as opposed to the lower 1.18% rate. That’s good. The bad news is for the first time in 20 years I’m paying a underpayment penalty. Not a large one, $15, but it still irks me.
The IRS rules say you must pay by withholding or estimated tax payments:
2014 HSA Contribution Limits
The IRS announced contribution limits for Health Savings Account (HSA) for 2014.
HSA Contribution Limits
Why Financial Advisors Favor Bond Funds Over CDs
CDs are a better deal than bond funds nowadays but investors often don’t realize it. You would think financial advisors would be all over it when they are living and breathing in the investment world day in and day out. However, besides Allan Roth and Larry Swedroe, I haven’t seen many financial advisors recommend CDs over bond funds. Do financial advisors have the same blind spots as investors, not realizing that time has changed and that the best CDs are better than bond funds for their clients?
It’s possible, but I don’t think so. Financial advisors are smart and knowledgeable people. If you and I can figure it out, they sure can. Certain inherent conflicts make them still favor bond funds over CDs even if their clients are better off with CDs.
Friday Reading: Internet Retirement Police
Meet Mr. Money Mustache, the man who retired at 30 by Kelly Johnson at The Washington Post
Blogger Pete MMM retired at age 30 but he still has a rental house and a blog. People debate whether he’s really retired. Pete calls doubters the Internet Retirement Police. When I retire if I still keep this blog, will the Internet Retirement Police nab me too?
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Can You File An Extended Warranty Claim After A Credit Card Is Closed?
I bought the watch in July 2011. The manufacturer has a 1-year warranty. I paid with my Starwood American Express card, which gives extended warranty for another year. I’m lucky it’s still within the 2-year mark.
American Express has a great online claims center for filing an extended warranty claim. The problem is I already closed the Starwood card because I was accumulating more Starwood points than I could use. I closed it before another annual fee would hit. After I closed the card, I removed the card from my online profile. I shredded the physical card. Now I don’t even have the full card number.
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