Fees for rolling over 401k funds?
July 7, 2010 7:05 AM   Subscribe

Should Nationwide have charged me a fee to roll over my 401K to my new employer's plan?

They deducted $75 in fees from my 401k. No one told me about it beforehand. It made me a little angry. Is it legal? Is it standard procedure? I'd like to know a little more before I call them.

My new employer is the US Federal Government, which has the TSP instead of a 401K plan, if that is relevant.
posted by jsturgill to Work & Money (5 answers total)
 
Sadly, they charge a $75 Termination Fee, as one last kick in the ass as you leave...

http://www.nationwide.com/brokerage-fees-and-charges.jsp?NWOSSiPos=1&NWOSSi=Termination+Fees
posted by nineRED at 7:26 AM on July 7, 2010


I doubt if they charged you a fee to "roll over" your account into a new plan. They probably charged you a "close out " fee for terminating your plan. I believe this is called a deferred sales charge or commission. You probably could have left it with them if you had chosen. The deferred charge is often based on how long you have been in the plan--the longer the less charge. I am quite sure it is legal but I am not an attorney or pension expert. If you had to move the money--which I think is unlikely as it is your money, not the employers or funds, then I would be surprised if there could have been a charge
posted by rmhsinc at 7:33 AM on July 7, 2010


And to answer the question as to whether they "should" charge you a fee--It depends on whether you believe they should make a profit. One way or another fund managers are going to make money either through fees, administrative charges, front/rear loading etc. The money you put in and any earnings is yours (they do not keep a percentage) but they will/need to find a way to cover their costs for the management of the funds.
posted by rmhsinc at 7:38 AM on July 7, 2010


Charging a termination fee is standard practice. There are real costs associated with closing out your account, mailing a check to the new provider, etc. You probably could have converted the 401K to an IRA at no charge and just left the money where it was.
posted by COD at 7:46 AM on July 7, 2010


Response by poster: And to answer the question as to whether they "should" charge you a fee--It depends on whether you believe they should make a profit.

Of course they shouldn't. People's retirement is serious business, and it should be about the retiree, not other parasites skimming off the top.

Oh well. Thanks for letting me know this was normal.
posted by jsturgill at 1:15 PM on October 31, 2010


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