FYI: I was in a tricky situation. A company asked me to speak to its employees about investing. They offer a Roth 401(k) plan. But when I studied the plan, it wasn’t a good deal. Yes, it offers tax-free growth. But it charges high fees. I figured employees would make more money in a taxable account that charged lower fees.
That might sound crazy. But it isn’t. In 2014, Yale Law School’s Ian Ayres and the University of Virginia School of Law’s Quinn Curtis published, “Beyond Diversification: The Pervasive Problem of Excessive Fees and ‘Dominated Funds’ in 401(k) Plans.”
They studied more than 3,500 401(k) plans. Sixteen percent of the plans charged fees that were high enough to wipe out the benefit of their tax-free status. In these cases, young investors would have made more money in taxable portfolios of low-cost index funds.
Regards,
Ted
https://assetbuilder.com/knowledge-center/articles/when-you-shouldnt-invest-in-your-companys-401k
