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Fidelity Tax on Vanguard Funds Highlights Flaws of Revenue Sharing in 401k Plans

Fidelity Tax on Vanguard Funds Highlights Flaws of Revenue Sharing in 401k Plans. The recent move to tax Vanguard funds used by Fidelity’s record keeping clients, while unusual, makes economic sense yet highlights the flaws of revenue sharing.

New plan sponsors that use Fidelity’s 401k recordkeeping services with less than $25 million must pay a surcharge of 5 BPs or 0.05%. Watch my vlog to understand why Fidelity is taking this unique move and why plan sponsors should consider using clean shares or those that do not have revenue sharing embedded in the expense ratio of investments.

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401k Communication with a Remote Workforce

401k Communication is important for plan participants in every organization where a self funded retirement plan is in place. When a company has a remote workforce widely distributed over multiple states, 401k Communication becomes even more important.  Today, many companies ...