Wall Street Journal Interviews Sev Meneshian, CFP® About Ways to Lower 457 Plan Fees

Chicago, IL, November 14, 2014 (Newswire.com) - Sev Meneshian, CFP® owner of Public Retirement Planners, LLC was recently interviewed by the Wall Street Journal about high investment fees found in many 457 plans.  457 deferred compensation plans are retirement plans used by municipal and state government employees to save for their retirement.  The 457 plan is to public sector employees what the 401(k) is to the private sector.

According to Meneshian "State and local governments that sponsor these plans will typically partner with an institution that administers the plan and charges a management fee for that service. While that’s a reasonable practice, the administrator may also seek to benefit by offering participants their own in-house funds that sometimes have ridiculously high fees. The expenses related to these funds can range from .05% to as high as 2% or 3%, compared with 0.05% to 0.2% for a low-cost index fund."

Meneshian shared a few ways that investors could potentially reduce 457 plan fees: "If they’re [employees] retired, clients can transfer the funds out of the 457 and into an IRA where they can select low-cost index funds. Most plan participants are passively managing their accounts anyway, and transferring allows them to avoid the high mutual fund and plan administration expenses that are commonplace with 457 plans."

As for wholesale changes, these can be made directly through the employer.  Meneshian explains: "If they can recruit other employees to join them, clients may also have success petitioning the plan sponsor, usually via the human resources department, to use lesser-known, smaller 457 plan administrators. Employee costs can often times be cut dramatically, by 50% to 60% or more, by selecting a lower-cost administrator."

For more information about 457 plans, visit www.PublicRetirementPlanners.com