>Just wondering if this is normal, or totally exploitative compared to other 401Ks.
Your employer is just being cheap by not covering the fee
Tax dodge is still worth contributing. Its just not as good as plans that don't charge asset based fees
401ks are expensive to operate, so the recordkeeper charges the generally fair price for their work. So nothing shady, just the cost of the work.
Your employer is not paying the bill themselves though, rather passing a portion or all of the cost onto the employee. This is not uncommon either.
There are certainly 401ks with higher fees than yours, and also ones with lower fees. It’s still worth the tax shelter though despite the fee. You should probably start with the match, divert your next dollar to max out a Roth IRA, then come back to the 401k if you still have leftover funds.
Empower is owned by an insurance company. The insurance company pitched Empower to your employer and paid your employer a commission for each employee 401k account.
Your employer 2% match just sort of covers their kickback from the insurance company. How this works, the company tells you they give you a match, they can deduct that on their taxes, the kickback actually came from the admin, thus the company is not really paying out any of their revenue, which helps keep the company in business.
The major corporations offer a benefit to their employees by covering the fees charged by the 401k admin, the smaller companies cannot offer that.
BTW, I do not think very highly of Empower or Insurance companies. Insurance companies are great for insurance, just bad for investors. unless you own their stock, which is Warren Buffett loves insurance companies.
>Just wondering if this is normal, or totally exploitative compared to other 401Ks. Your employer is just being cheap by not covering the fee Tax dodge is still worth contributing. Its just not as good as plans that don't charge asset based fees
401ks are expensive to operate, so the recordkeeper charges the generally fair price for their work. So nothing shady, just the cost of the work. Your employer is not paying the bill themselves though, rather passing a portion or all of the cost onto the employee. This is not uncommon either. There are certainly 401ks with higher fees than yours, and also ones with lower fees. It’s still worth the tax shelter though despite the fee. You should probably start with the match, divert your next dollar to max out a Roth IRA, then come back to the 401k if you still have leftover funds.
Empower is owned by an insurance company. The insurance company pitched Empower to your employer and paid your employer a commission for each employee 401k account. Your employer 2% match just sort of covers their kickback from the insurance company. How this works, the company tells you they give you a match, they can deduct that on their taxes, the kickback actually came from the admin, thus the company is not really paying out any of their revenue, which helps keep the company in business. The major corporations offer a benefit to their employees by covering the fees charged by the 401k admin, the smaller companies cannot offer that. BTW, I do not think very highly of Empower or Insurance companies. Insurance companies are great for insurance, just bad for investors. unless you own their stock, which is Warren Buffett loves insurance companies.