Second Generation 401k Plan Requirements

While 401k retirement plans provide many benefits, including tax-deferral, automatic contributions every pay period, and occasionally a matching contribution from the employer, many have serious drawbacks: inferior investment choices, very high fees and poor service with little or no professional advice (regarding professional advice, please see Smart Money Magazine's recent, timely article entitled,
Who's Running Your 401(k) )

Pension plans have historically been provided by multi-line insurance companies. After selling various insurance products to a business, these companies then try to add-on a 401k plan to the sale. Unfortunately, most of these plans come with a plethora of poor features, which include:

1.Very high fees.

These fees are usually hidden, not disclosed at the outset, and are almost impossible to ascertain by a non-professional. In fact, Congress has proposed legislation that will mandate that these fees be disclosed up-front in clear, easy to read English. To view a documentary video clip produced by Bloomberg Television -
"The Truth Behind Hidden Fees in 401k's", click here.

  • At Reyes Capital, we charge extremely reasonable fees. Our management fee starts at 1% and drops to as low as 0.25% for larger plans.

    • 2. Limited investment choices.

    The options available to early 401k/403b investors were often limited to 10-15 mutual funds, often from the same mutual fund family. Moreover, this mutual fund family was owned by or had a fee-sharing relationship with the company selling the 401k - a clear conflict of interest. Today, with an independent provider, many more options are available that are free of these conflicts. Open Architecture is the term used to describe a situation where the plan participants can choose from a very wide range of investment options, including mutual funds from many different fund families. There is even a brokerage option, where the 401k funds are placed in a regular brokerage account, and the investor has almost unlimited choices, including individual securities.

  • At Reyes Capital we only partner with 401k providers who offer Open Architecture and clear, easy-to-understand pricing with no hidden fees.

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    3. Poor service and advice.

    Oftentimes, the only person 401k participants would ever have in-person contact with was the sales representative and then occuring once per year, at best. This salesperson would hand out enrollment forms to new employees, and that would be the extent of the advice and service.

  • With Reyes Capital, our 401k plan participants demand and get one-on-one, hands-on advice from a senior, highly qualified professional investment advisor.


    • Another Way...Small Company Service and Fees, Large Company Choice

    At Reyes Capital we understand the importance of defined-contribution pension plans such as 401k's and 403b's. That is why we have partnered with independent, low-cost pension plan providers to offer a complete pension plan solution to small and mid-size businesses. When combined with our sophisticated investment advice, these solutions offer unparalleled value to the small and mid-size business.


    To learn more, please call us at 415-775-6050, or email us at Reyes Capital Management .