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Andrey

Vanguard charging fees

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I have 403(b) plan with Vanguard. It was 0 cost for a while, but I noticed that for a year or two, they started to charge me $60 annual fee. Is it legal? How can I fight it?

Thank you :-)

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This fee started at about the same time that the outsourced their 403B services to the Newport group.  I think they lowered some of their expense ratios held in the 403b plans at that time also.

 

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MNGopher is right, they lowered fees by finally providing access to Admiral shares, which I guess became a moot point shortly later when Admiral shares were effectively merged with Investor shares (the lower fee of Admiral shares + the lower minimum investment of Investor shares).

Andrey, I don’t know what deal your employer may have worked out with Vanguard before this change. However, I do know that before there was a $60 annual fee, Vanguard charged an annual fee per fund that you owned. I think it was $15 per fund.

Charging this fee is entirely legal. While I’d like to eliminate fees entirely, it is important to realize Vanguard has arguably the best 403b in the industry, with Fidelity being their only competition (and likely the winner). Even Fidelity charges an annual fee. You’re lucky to have access to Vanguard. 

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On 4/30/2019 at 10:31 PM, Andrey said:

I have 403(b) plan with Vanguard. It was 0 cost for a while, but I noticed that for a year or two, they started to charge me $60 annual fee. Is it legal? How can I fight it?

Thank you 🙂

Of course it's legal. Their previous 403b fee was $25 per fund per year I think, which could easily add up to more than $60. There is now no per fund set fee, just the $60/yr and each fund's low expense ratio. Their ERs are still between 5 and 10 times less expensive than the industry's average. Either fee schedule is a bargain. They have added a Roth 403b option and have Admiral class available.

Granted, the $60/yr fee is a high percentage of a $10,000 account balance (0.6%), but is only 0.06% fee on a $100,000 account balance. Maybe that will help motivate you get your 403b balance up here! That's how you "can fight it".

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So many of us here would LOVE to pay the $60 fee for a Vanguard 403(b)!

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I agree with Moe

Count your blessings that you have Vanguard !!  The expense ratio is a much more meaningful number to look at than a yearly one time fee. It will drain your account ruthlessly over time much more than the yearly fee. That  is why lowering your expense ratio is key. On the other hand having low fees alone will not make you a successful investor. It is just one part of the equation. Make sure you understand diversification, dollar cost averaging, buy and hold, compounding, indexing, pay your self first concept etc. Only with a  wide investing knowledge base can you reach your goals.

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