DABU Posted November 12, 2021 Posted November 12, 2021 My wife works for a company publicly traded on NADAQ and has an ESOP option in her 401(k). Company's stock in ESOP is 100% vested. The plan administrator sells a small quantity of vested stock every quarter to pay towards the administrative fee. She called the plan administrator and the administrator indicated that the expenses cannot be taken out of a stable value/money market fund. So, the administrator must sell the stock. Is this a common practice? We don’t want to sell the vested company stock to pay for paying administrative expenses. Any comments/suggestions will be appreciated. She also has mutual funds and expenses have been taken out from the corresponding investments. We don’t have any issue with mutual fund expenses. Thanks for your help. Dabu.
Cardscrazy Posted November 20, 2021 Posted November 20, 2021 Well it's natural to have expenses associated with the ESOP portion in the 401(k) plan e.g., independent audit fees, trustee fees, third party administrators, and maybe investment advisor fees. There's probably a requirement that all expenses are ratably allocated based on assets, resulting in the need to sell ESOP shares to pay them. Since everyone is 100% vested there are no forfeitures to use sell to pay expenses. Since the ESOP is within the 401(k) it must be that your company refuses to pay those expenses themselves, which they could. There should be information in your summary plan description. There should be some transparency, including an annual fee notice that provides fee information. Find out who is on the company benefits committee and ask them.
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