Are you wondering how to reduce 401k fees? You've come to the right place. I was paying over $1,700 a year in 401k fees until I finally did a 401k portfolio audit.
Now I'm hardly paying any 401k fees. Due to analyzing my portfolio with Personal Capital's free fee analyzer tool, I have reduced my 401k fees by over $100,000 over the next several decades. My goal is to help you reduce 401k fees as well.
How To Reduce 401k Fees Through Portfolio Analysis
Do you know how much in mutual fund fees you are paying a year? I didn't, so I ran my 401K portfolio through Personal Capital's free 401k fee analyzer and I was absolutely shocked by the results!
I always figured that from a percentage point of view, my 401k fees were small. But, when you take a small percentage multiplied by a big enough number, the absolute dollar amount starts adding up.
Take a look at my excessive 401k fees I was paying per year: $1,748.34!
In 20 years, I will have paid roughly $84,000 in 401k fees based on only this amount.
The second portion of the above chart shines a light on the specific fund that costs the most. In my case, it is the Fidelity Blue Chip Growth Fund with a 0.74% expense ratio.
I've got another fund worth about $22,000 as part of my 401K which does not show a fee, because it is a hedge fund whose fees are baked into the performance.
Typical hedge fund fees are 2% of assets under management and 20% of upside. This is called 2 and 20, which is egregiously high, but it's the only way I can get short exposure to hedge my bets.
I've been wanting to do a 401k/mutual fund fee analysis for the longest time, but was too lazy to do the analysis until I realized I didn't have to do the calculations myself. Every year I want my portfolio to be as optimized as possible.
How To Analyze Your 401k For Excessive Fees
Here are the steps analyze your 401k for excessive mutual fund fees. You can either do so manually or with Personal Capital's free 401k analysis tool. I've been using Personal Capital to analyze my 401k fees once a year since 2012. It has saved me a ton of money since!
1) Watch out for a huge spread in expense ratios.
In my portfolio, the cheapest expense ratio is 0.19% for the Vanguard IT Index Fund and a whopping 0.74% for the Fidelity Blue Chip Growth Fund. 0.74% is almost 4X greater than 0.19%. The reasons for the higher mutual fund fee is because they've got to pay the fund manager and analysts for providing alpha and outperforming the S&P 500 index.
If the fund manager(s) can indeed outperform the S&P 500 index by more than 0.5% a year, then their fee is on par with my cheapest Vanguard Index Fund. If not, I'm wasting my money.
The data shows that most actively run mutual funds underperform their respective indices over 10 years. Therefore, paying a high active fund fee is generally not a wise choice.
2) Watch for high turnover ratios.
A 100% turnover ratio means a $10 billion dollar fund sells 100% of its holdings every year. Buying and selling positions cost money. That's how the equities department of major Wall Street firms make money. I know because I worked in equities for 13 years.
Buying a large new $300 million position for a 3% weighting in a $10 billion dollar mutual fund can also cause the stock to rise in the open market. As a result, the potential acquisition cost of owning shares increases the more a fund turns over.
Yes, dark pools, algorithmic trading, and block trading have helped minimize the impact large transactions have on the share price. However, the more a fund trades, the higher the likelihood of an impact.
Shoot for a fund with under a 50% turnover ratio. The lower the better as that means there will also be less tax drag.
3) Know that fees add up over time.
In 20 years, I will have paid ~$87,000 in mutual fund fees if I keep my existing portfolio. I don't know about you, but that seems a lot, even if my 401k does grow to $1,500,000 as my 401K savings guide estimates.
Just doing the math here, 67% or $58,290 of the $87,000 in fees will have come from my Fidelity Growth Fund alone. Meanwhile, the Fidelity growth fund only accounts for 39.5% of total assets.
Long term growth has a way of compounding into great returns for consistent investors and savers, however it sure does a number on the total amount of fees as well.
4) Understand the tax cost ratio.
The Tax Cost Ratio measures how much a fund's annualized return is reduced by the taxes investors pay on distributions (relevant for non-tax advantaged accounts). The range is usually between 0%-5%. The lower the better.
For example, if a fund has a 1.5% tax cost ratio for the three-year time period, it means that on average each year, investors in that fund lost 1.5% of their assets to taxes e.g. a 10% return is really only a 8.5% return.
It's good my highest fund with a 0.74% expense ratio has only a 0.11% tax cost ratio. One can simply combine the two to figure out the fund's total expenses. The Fidelity Growth Fund is therefore 0.85% vs. 1.94% for the Vanguard Precious Metals fund. The Vanguard IT Fund is the lowest 0.31%.
5) Vanguard funds are likely your best bet.
The Vanguard family of funds have some of the lowest, if not the lowest fees in the mutual fund industry. The reason is because of their scale and also because they run passive index funds.
There's no team of analysts to pay. There are no business trips to expense to go kick the tires of the companies they hold. The index is rebalanced usually once a quarter, or whenever there is a big index addition or subtraction to reduce variance risk.
Three out of four of my funds are by Vanguard. After I finish typing this post, all of my funds will be by Vanguard!
6) You can create a portfolio of index specialty funds.
If you don't want only want to invest in the S&P 500 index, you can diversify by buying speciality index funds. Buying speciality index funds gets you a little closer to buying individual stocks that are usually not allowed with 401k programs.
In the example above, 60% of my entire 401K allocation is invested in three speciality index funds: Energy, Metals & Mining, and Technology. If you have conviction in particular industries which you think will outperform, there is an index fund for you.
I did buy some ARKK, a fund by Ark Capital once it sold off about 32% from its high in 2021. I want to gain exposure to high growth stocks. Unfortunately, the fund has a 0.75% expense ratio.
401k Fee Pro Forma Analysis Of Lost Retirement Value Over Time
The below chart is what makes me sick about paying too much in 401k fees. Let's say I continue to max out my 401K like I have been doing since 1999. Let's also assume I get a full employer match. Finally, let's assume an annualized return of 5.8%.
After 30 years, I will have paid $489,014 in 401k fees and lost out on two years worth of retirement income! That is just way too much in 401k fees to pay.
The funny thing is, my blended expense ratio is 0.43% compared to Personal Capital's target benchmark of 0.5%. At any rate, the public is paying a tremendous amount of mutual fund fees over our lifetimes. We really don't know exactly how much in fees w pay until we do the analysis.
The 401k plans and mutual funds are counting on the public to be lazy and not analyze their portfolios for excessive fees. Many fund companies and 401k providers like to bury their fees in the fine print so it's hard to find.
If you want to make big bucks in your life, you should consider a career in money management. It's all about leverage. A fund manager can run $1 billion dollars under management as easily as he can run $10 billion dollars under management. If he or she does, he or she will make millions of dollars.
Take Action To Save Big Money In Your 401k
Please don't let your 401k administrator and mutual fund companies take advantage of you. Now that you know how to reduce 401k fees through portfolio analysis, take action.
Personal Capital helped me realize that I am paying at least $1,700 more a year in mutual fund fees than I should be paying thanks to the Fidelity Growth Fund. I've simply swapped the fund out for the S&P 500 ETF, QQQ, SPY, which costs hardly anything to own. I did this back in 2013, and as a result, I've saved over $12,000 in fees in seven years.
I wouldn't have been able to see what an outlier the fee is without the 401K fee analyzer that aggregates all the data and provides a side by side comparison. Not bad for a free online financial management huh? I suggest everybody take a hard look at their finances to see where they are paying unnecessary fees.
Step By Step Instructions To Reduce 401K Fees
If you want to figure out how much in 401k fees you are paying, do the following:
1) Spend one minute to sign up with Personal Capital. It's free and secure.
2) Click the “+” button on the top left to add/link an account. For my Fidelity hosted 401K, I typed in the search box “401k.com” since the Fidelity pre-populated button just linked to my Fidelity rollover IRA.
3) After your 401K account is linked, click the “Investing” tab on the top right then choose “401k Fee Analyzer”
4) Adjust your contributions, estimated returns, employer match, and estimated future fees to get an idea of how much you could have in your investment portfolio over time.
5) Research alternative ETFs and index funds that can replace your expensive actively managed funds. Figuring out the proper equity exposure is the most important part of your retirement planning. I encourage you not to waste time trying to pick stocks or trade in and out of sector ETFs. Instead, focus your on things you can better control or enjoy.
About the Author: Sam began investing his own money ever since he first opened an online brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working in finance. Sam received his MBA from UC Berkeley with a focus on finance and real estate.
Never stop maxing out your 401k! At the same time, never stop analyzing your 401k for excessive fees.
I have a 401k with my firm thru AmFunds…I am relegated to their funds. Mutual funds. I do have an incredible match, usually .30 to .60 on EVERY dollar I put in. So obviously it makes good sense to max it annually even absent any market returns. That said, I just try and avoid any fund fees larger than .50% as a defense against the vampire nature of a lot of these vehicles.
Hi , I am thinking of starting a 401K contribution for tax saving purposes (not eligible for IRA deduction due to the CAP on MAGI – joint tax filing). The catch here is that my employer is a small consulting firm and hence doesn’t offer match for the contributions. Also, while going though the prospectus of their 401K plan through American Funds, I noticed that expense ratios for the options they provide is pretty high (1.4% and up ). Does it make sense to go ahead with the contributions and maxing out $19500 or shall i hold off. I was interested in Growth fund of America which has an average RR of 14% over 10 years. Please help :-(
401(k) fees and portfolio fees definitely hurt performance over the long term. Definitely best to go low cost index funds and stop trading around.
Taxes are the next big killer!
Hi Sam- newbie in this forum. Regarding the fund fees for your various index and/or mutual funds, have you compared the performance of those with higher fees to the lower fee funds (of course with taking the fees into account)? I’m sure you probably did, but this is something that I did along with my FA not too long ago and we found that those in question with higher fees did perform better over the same time vs. the lower fee equivalent index funds or ETFs despite the higher fee. I know this wouldn’t always be the case, but in mine it was so I didn’t make any changes.
Nice blog and interesting topics for all..
The best thing to do if you are in a Company 401K plan is to find the lowest fees in that plan. It’s usually an Index Fund.
Given a choice, Vanguard hands down.
I would have liked to have used the Personal Capital’s free 401k fee analyzer but was disappointed that it required giving ID’s and passwords to my accounts. I would be willing to hand enter funds and dollar amounts but there is no way that I would ever give someone access like that.
I had the same experience and stopped at that point
Definitely don’t use things you are uncomfortable using.
I’ve decided to use my credit card to buy things and go online to buy things with my info bc I’ve decided to trust the security of companies. It’s the risk I’m willing to take.
And if companies can’t get their risk controls right, then they run the risk of running out of business.
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Sam,
How do you recommend going learning about a 401(k) fee structure if it’s employer-provided? Is there any course of action you would recommend to get an employer to switch vendors? Do you have a post about the different 401(k) vendors and pros/cons?
Thanks!
I just checked our 401k fees with Personal Capital; 1.4% or 37% in fees over the next 10 years.
We are employee/owners and contribute to the annual maximum of approx. $ 55,000 each per year. We are both in target date funds with John Hancock via our advisor at Ameriprise. Can you suggest where we might make changes? We have a small office of under 10 employees in our plan too. Do I look for another advisor or investment company etc?
Yikes.. .that is A LOT Jane! I would look into Vanguard funds or ETFs that have fees less than 25 bps.
You folks are talking about 401K fees, what about 403b fees, can I do the analysis through that Portfolio Analysis tool? Thanks!
Helen, the 401k Fee Analyzer tool will run your 403b portfolio and all portfolios. Give it a try by linking up all your investment portfolios.
I would kill for such low expense + fee ratio.
My 401k is with Transamerica, and the lowest expense ratio i have a choice for is 0.79% an the fee is set at about 0.76%.
The highest is at 1.45% and average is between 0.91% and 1.10%.
Even the few (2 to 3) Vanguard funds and the Vanguard Target Retirement Funds are at 0.91%+.
I don’t have a lot of options. No rollover options here.
With the funds i picked i pay about 1.50% to 2.00% in expenses & fees annually.
The company i work for offers no matching. I’m wondering at what point it is more beneficial to switch to after tax investments with lower fees? My after tax Vanguard fund usually cost 0.17%.
This is so helpful and a little terrifying. I didn’t know personal capital offered this fee analysis and that’s my next stop after this post. I’ve used it for a while but haven’t payed much attention, clearly not beneficial. Thanks for directing me there!
Hi, I was just wondering why you use Fidelity for your rollover IRA vs. opening an account directly with Vanguard, since you mentioned that you would primarily be investing in Vanguard funds in your retirement account. I’m in a similar situation and compared the cost of purchasing funds/stocks/etfs through Fidelity vs. Vanguard and found that Vanguard was more cost-effective. For example, if your account is between $200k-$500k, Vanguard charges $7/trade for stocks/etfs vs $7.95/trade at Fidelity. If you have over $500k at Vanguard, each trade is reduced further to $2/trade. Additionally, Vanguard transaction fees for some out-of-network funds are at most $35 whereas Fidelity charges a transaction fee of $75 for funds outside of their funds network, which includes Vanguard funds and some are not even made available to purchase. Is there a compelling enough reason to stick with Fidelity given that their fees are higher for accounts that have larger amounts? Just wondering.
Several things:
1) Easy to rollover to Fidelity
2) I get 100 free trades
3) I don’t care about saving $1 a trade. Maybe if I had a $10,000 portfolio I might care more.
4) Im investing in stocks and other instruments in my Rollover IRA.
Thanks for asking. Please tell me about your portfolio and what you are doing.
Thanks for your quick response. I guess I too would stick with Fidelity had I been offered 100 free trades, but unfortunately, that was not the case. I rolled my 401k over to an IRA at Fidelity last year, since I already have accounts with them and I can’t complain about their services and have been with them for over 12 years now, but after comparing their fees, I was considering switching over to Vanguard, since I also have Vanguard funds and was thinking of purchasing more and/or switching some of my existing funds within my account. I’m also trying to clean house a bit, since I have a combination of way too many stocks/etfs/funds, many of which probably overlap. But then I read your article and since you have such great insight on these topics and you were with Fidelity, I wanted to reach out to you and get your thoughts before pulling the trigger. I think I’ll go ahead and do the transfer to Vanguard, since they didn’t offer me any free trades, but I’ll keep my brokerage accounts with Fidelity and will let you know how it goes.
Great article by the way…it certainly is a reality check to actually see the dollar amount in fees that we pay vs. the percentages!
Thanks Again!
No problem. It is kind of crazy how much in fees add up. I’m sure the large majority of us, including myself are blissfully ignorant of how much we pay in portfolio fees.
Nice article. Reminded me to check my expense ratio on my 401k us large company index fund. I was please to see i was only paying 0.02%. I don’t subscribe to the believe that active managers can generally outperform an index over long periods of time, net of fees. There may be a few, but probably none i’ll be able to access :)
I probably should get more into these. I’ve been looking at Fidelity for a few small investments-not so much on the stocks but maybe in the mutual funds.
Sam,
From the graph above I see you have a traditional 401(k) plan.
My company just closed it’s doors forever and I will be withdrawing my 401(k) contributions from the companies horrific choice of funds (with even more horrific expense ratios.)
Great!!
My question is:
What are your thoughts (or pitfalls) on converting the contributions to a ROTH IRA rather than just initiate a 401(k) rollover to Vanguard?
I realize it will take a tax hit but the tax free growth for the next 20 years appears to outweigh the tax.
J in Florida
Hey J,
Sorry to miss this earlier question. I’m against paying any sort of taxes upfront. So, the pitfall is you pay up front and the government goes on a massive spending binge and takes even more away from you when you decide to withdraw. They can change the rules at any time.
But since you are in Florida and your income is under the 25% tax bracket, I don’t see much pitfall at all for you.
Sam
Sam, great article…I myself mostly invest individual stocks, but do own mutual funds through my 401K and have a couple outside my IRA’s, these all are no-load and low expense form Vanguard and fidelity. I am currently working on an article about one specific fund that I think can fit the everyday person: Vanguards Wellesley Income Fund (VWINX). Check it out, it may be a bit conservative for your taste, but its cheap, no-load, and a good performer.
Sincerely,
Joe
Thanks JA. Will check out your fund. My 401K only offers funds, and a certain number of funds. However, I may rollover to an IRA. We shall see. Cheers
One of the things you’ll realize the more you accumulate is that you do NOT feel OK to commensurately pay more in fees. I think it’s human nature because it doesn’t cost a manager of your fund 10x more effort to manage when you have 10x more than you did at age 25.
This is partly why it is so vexing for higher income earners who pay the most percent and absolute in taxes to be asked to pay EVEN more. Once you experience it, you’ll go on revolt
That looks like a pretty cool service. I’ve always been mindful of fees and expenses when picking funds for my 401k and IRAs…I’ll have to run them through this to see how well I’ve actually done.
It’s very cool. I’ve been playing around with the various tools all morning and have another post in the works. Super pumped to be using PC!
Sam,
This is really great stuff! I tend to think of my fees as negligible when they are <.75%, but this graph really shows you how 401k fees can cut into your earnings. Understanding your fees, and minimizing them, is truly taking your retirement earnings to the next level. Nice tip on the Vanguard funds – I will have to check them out and take a closer look at what the fee structure is on my portfolio. Thanks!
No prob Brend. 0.75% isn’t that great, but everything is relative! If we can pay 0.2%, then we’d be a full to pay 0.75% for a similar fund, unless the fund has an outsanding track record of outperformance. Over a 10 year time frame, everything mean reverts!
Thanks for the tips Sam! What I really enjoy about your posts is how you add your own portfolio/situation to it, offer your opinion and advice, and provide a solution.
I read other PF blogs where it is obvious the writer has never used the product. I’ll be looking at my 401k to gear up for the new year!
You bet Sarah. I write what I know and feel. If I don’t know something, I’ll say it, or I just won’t bother to write. I think it’s important to write from our knowledge, not from only pontification.
Those are cool graphs. I’ve never done that type of analysis with my funds. I like how they make it so easy to see and compare. I’m so glad I started contributing to my 401k when I did too because the money really adds up, especially with company matching. I like how Personal Capital lets you log on in one place and see everything, not just 401k.
I’ll help you with the analysis when you get a chance. It’s really straightforward, and a good time to do the analysis as we prepare for the next year.
EXCELLENT analysis Sam! Personal Capital makes the ability to analyze so much easier with their 401K analyzer. I’m doing the same exercise myself now and am noticing some inefficiencies in my portfolio as well. I have too many funds (12) which aren’t focused on my risk parameters.
I recommend everybody check out Personal Capital as well. Great tool for building wealth because you know where your money is going!
Thanks Brett! 12 funds is a lot. Hopefully you’ll optimize your portfolio to what you see is most comfortable to you. I’m generally around five funds.
Recent study finding that active fund managers as a whole do no better than would be expected by luck alone. The study suggests that switching to low-cost passive funds is the right move: “a portfolio of low cost index funds will perform about as well as a portfolio of the top three percent of active funds and certainly better than the rest of the active fund universe.”
Yep, totally agree. It’s the darndest thing to get paid to underperform. But, it’s a big industry where you can make a lot of money!
Last year, I learned that my 403B fees were outrageous! At first, the fees were small because it was a percentage. I asked some pointed questions and was able to reduce the fees to $1 per month with just a little work on my part. I have to manually transfer my contribution from my money market account to a brokerage account, but it beats a percentage fee. As my balance keeps growing I certainly did not want to pay a percentage fee.
Nice work Larry. That’s the thing. Everybody just happy go luckily goes along and pays whatever, not noticing the drag along the way. Once they run their 401k through something like Personal Capital” target=”_blank”>Personal Capital’s 401K Fee Analyzer, folks wake up!
Fees add up over time!
You are probably aware of this, but your fidelity fund would have to beat the s&p by a number greater than the difference between the two fees since the fidelity fund has a beta greater than 1 – even if the fidelity fund had excess returns some of it would be due to beta which you should not be paying for (or should be paying much less for than additional returns due to alpha).
Good point Dan, and you’re right. All the more reason to lower fees more.
Thanks for posting this article. I was getting a bit concerned with the way I’ve been managing my accounts. But, I reviewed how well my portfolio has done compared to my friends who pay for active management ( about 15 friends ). My returns have beaten all but one.
I’m 38 years old and I’ve saved the following amounts:
290K – Before Tax 401k
112K – Roth 401k
402K – Total in Tax deferred Accounts
I’m a conservative investor that follows the philosophy of Jack Bogle. My overall portfolio has returned 6.4% since 1998. I invested in primarily low cost index funds. I have a 50% stock ( Vanguard Total Stock Market Index fund, Total International Index Fund ) with 50% bond asset allocation ( Vanguard Intermediate Bond Fund and Vanguard TIPS fund); I use very cheap index funds with my portfolio. Based on my portfolio predictions, I should’ve earned 8.1% return but stocks have not returned what they were supposed to. Based on what i’ve read and research, the bond portion of my portfolio should not do as well the next 10 years. So, I’m going to slightly increase my stock allocation. I rebalance my allocation once a year and review my returns quarterly.
I plan to be a bit more aggressive and use a 60% stock and 40% bond allocation for the next 10 years ( 2013 – 2023 ). My goal is to save 58% of my income after taxes which is about 8K per month. I plan to semi-retire at 50 and become a part time teacher; I enjoy teaching but the pay is not that good.
Nice work on the savings Rav! With a 58% after tax savings rate for the next 10 years, there’s no doubt I think you will get to semi-retirement at age 50. This is what Financial Samurai is all about. Reaching financial independence sooner, rather than later!
That is excellent Rav, although more than half your pay for the past 13 years has done you very, very well on a teacher’s salary!
Hi Rav,
Awesome job with your investments! Question on how you decided to allocate more in Before Taxes vs. after taxes. I’ve heard that with lower income, it’s best to to pre-tax 401k. Thanks!
Another blogger recently talked about calculating the MERQ, which is the total returns you will lose over a quarter-century (25 years). When you look at it that way, anything with a fee of 2%+ is making more money for the manager than it is for you. Even a low fee can add up but it’s better to lose 10% of your portfolio than 75%!
The Personal Capital chart sounds similar to that. It would be useful if they showed the total returns you would get over 20 years with and without fees. But I guess that requires estimating the actual returns and that can be dangerous. Maybe they could just let you put in your expected returns.
Turnover can be a warning sign too. It looks like the Fidelity managers decided that 95% of their choices last year were bad. Fortunately they didn’t generate a lot of tax by selling the entire portfolio in 1 year since they must have picked a lot of losers. The chances that they will earn their fees in the future seem low… let’s call it 0.74%.
Thanks for bringing that up. Personal Capital does have a pro forma analysis tool, which I’ve added to the post in the second chart. It’s always good to play around with the numbers and see!
They’ve really done that well. Hopefully people learn from lessons from it. There is a downside though. I was talking about this with my friend who is a financial advisor and he agreed that it makes the high-fee funds look terrible (if you threw in the additional 1% in fees you would end up with a lot less) but even a reasonable fee can look pretty big as you showed. In the end you have to pay to play!
Tax Cost Ratio has more meaning for accounts that are taxable (in the current year), correct?
I.e., in a 401k, it has much less (or no) impact…
Excellent question. There is no avoiding taxes. Each investor will have to pay sooner or later. The tax cost ratio, the higher it is will drag down performance.
The good news for investors in accounts such as a 401(k), 403(b), or IRAs is that all taxes are deferred on the capital gains distributions paid by funds held within these accounts. If you hold mutual funds within a tax-deferred account, the tax efficiency of your funds is not strictly a concern.
Does this mean investors should be indifferent to high turnover rates for funds held within their tax-deferred accounts? No. High turnover rates will still present a drag on a fund’s annual returns because of the trading costs of buying and selling often. As noted before, the drag on an average managed mutual fund with 85% turnover is approximately 0.7% per year.
Sam,
By your own calculation on what should be in a 401K, do you measure yourself as being behind or on track?
Great analysis of fees- they really do add up!
-Mike
Mike, based on my 401K savings guide, I’m on track. However, there is a fear I will fall behind as I focus on my online entrepreneurial endeavors. However, I hate paying taxes, so will continue maxing out in an individual 401K and/or SEP-IRA.
The 401K is a woefully light instrument for achieving financial freedom due to the contribution limits, but we’ve got to make due with what we have and optimize. We’ve got to also focus on our after tax savings, investments, and alternative income streams for the now.
Individual 401(k)s: Also called “solo” or “one-participant” 401(k)s, they are available to free-lancers, independent contractors and sole proprietors. as well as business owners with no employees other than a spouse. Since you are both the employer and the employee, you can contribute to the plan in two ways. As an employee, you can contribute up to 100% of your compensation, up to a limit of $17,000 in 2012, plus a catch-up contribution of $5,500 if you are at least 50 years old, for a total of $22,500.
As the employer, you can contribute up to 20% of your self-employment earnings—or 25% if your business is incorporated, says John Heywood, a principal at Vanguard Group’s retail-investor unit.
In 2012, total contributions from both employer and employee can’t exceed $50,000, or $55,500 if you are 50 or older.
SEP-IRAs: Simplified employee pensions are often called SEP-IRAs, because your contributions go into an IRA. You can contribute up to 25% of your net self-employment income, up to a maximum of $50,000 in 2012. Contributions are deductible as a business expense.
Sam … you wrote a portion of an article right there! LOL
As always, thank you for your financial knowledge that you present.