What are the key takeaways from this The Money Guy Show episode?

Key insights include: **Revenue-Sharing Costs:** Department of Labor research found over 50% of the thousand largest 401(k) plans contain funds with revenue-sharing arrangements where investment options pay kickbacks to plan administrators. Even index funds can carry inflated expense ratios—some Vanguard S&P 500 funds in certain plans charge over 0.50% versus the standard 0.10% or less, costing hundreds of thousands over a career.; **Performance Impact Math:** Two S&P 500 tracking funds with different fee structures demonstrate the wealth erosion from high costs. A revenue-sharing fund charging 0.67% expense ratio versus a low-cost index at 0.015% creates returns of 9.33% versus 9.985% on a 10% market return. This seemingly small difference compounds to hundreds of thousands of dollars lost over a working career.; **Employee Advocacy Strategy:** Workers can successfully improve their 401(k) plans by asking HR departments specific questions about low-cost index fund availability and safe harbor plan options. One listener improved their entire company plan by requesting changes, demonstrating that plan improvements often require just one employee to initiate the conversation with tactful, solution-focused proposals that benefit all parties.

How long is this episode of The Money Guy Show?

This episode is 62 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

The Money Guy Show

Your 401(k) Might Be Costing You Thousands

February 4, 2026

62 min episode · 2 min read

Episode

62 min

Read time

2 min

Topics

Career Growth, Productivity, Health & Wellness

AI-Generated Summary

Published Feb 4, 2026

Key Takeaways

✓Revenue-Sharing Costs: Department of Labor research found over 50% of the thousand largest 401(k) plans contain funds with revenue-sharing arrangements where investment options pay kickbacks to plan administrators. Even index funds can carry inflated expense ratios—some Vanguard S&P 500 funds in certain plans charge over 0.50% versus the standard 0.10% or less, costing hundreds of thousands over a career.
✓Performance Impact Math: Two S&P 500 tracking funds with different fee structures demonstrate the wealth erosion from high costs. A revenue-sharing fund charging 0.67% expense ratio versus a low-cost index at 0.015% creates returns of 9.33% versus 9.985% on a 10% market return. This seemingly small difference compounds to hundreds of thousands of dollars lost over a working career.
✓Employee Advocacy Strategy: Workers can successfully improve their 401(k) plans by asking HR departments specific questions about low-cost index fund availability and safe harbor plan options. One listener improved their entire company plan by requesting changes, demonstrating that plan improvements often require just one employee to initiate the conversation with tactful, solution-focused proposals that benefit all parties.
✓Lump Sum Versus Dollar Cost Averaging: The Goldilocks rule provides clear guidance for investing windfalls based on percentage of total investable assets. Invest immediately if the amount represents under 10% of holdings, spread over four months for 10-20%, and dollar cost average over twelve months for amounts exceeding 50% to balance market participation against transaction risk.
✓Backdoor Roth Versus Roth 401(k): High earners should prioritize backdoor Roth IRA contributions over Roth 401(k) salary deferrals when in top tax brackets exceeding 37% effective rates. Traditional 401(k) contributions provide immediate 40-50% tax savings (including state taxes), while backdoor Roth conversions allow tax-free Roth funding without sacrificing current deductions, creating optimal tax arbitrage opportunities.

What It Covers

The Money Guy Show examines hidden fees in 401(k) plans that cost investors thousands through revenue-sharing arrangements and high expense ratios. Hosts Brian Preston and Bo Hansen explain how to identify expensive funds, advocate for better plan options, and optimize retirement savings through proper fund selection and account structure strategies.

Key Questions Answered

•Revenue-Sharing Costs: Department of Labor research found over 50% of the thousand largest 401(k) plans contain funds with revenue-sharing arrangements where investment options pay kickbacks to plan administrators. Even index funds can carry inflated expense ratios—some Vanguard S&P 500 funds in certain plans charge over 0.50% versus the standard 0.10% or less, costing hundreds of thousands over a career.
•Performance Impact Math: Two S&P 500 tracking funds with different fee structures demonstrate the wealth erosion from high costs. A revenue-sharing fund charging 0.67% expense ratio versus a low-cost index at 0.015% creates returns of 9.33% versus 9.985% on a 10% market return. This seemingly small difference compounds to hundreds of thousands of dollars lost over a working career.
•Employee Advocacy Strategy: Workers can successfully improve their 401(k) plans by asking HR departments specific questions about low-cost index fund availability and safe harbor plan options. One listener improved their entire company plan by requesting changes, demonstrating that plan improvements often require just one employee to initiate the conversation with tactful, solution-focused proposals that benefit all parties.
•Lump Sum Versus Dollar Cost Averaging: The Goldilocks rule provides clear guidance for investing windfalls based on percentage of total investable assets. Invest immediately if the amount represents under 10% of holdings, spread over four months for 10-20%, and dollar cost average over twelve months for amounts exceeding 50% to balance market participation against transaction risk.
•Backdoor Roth Versus Roth 401(k): High earners should prioritize backdoor Roth IRA contributions over Roth 401(k) salary deferrals when in top tax brackets exceeding 37% effective rates. Traditional 401(k) contributions provide immediate 40-50% tax savings (including state taxes), while backdoor Roth conversions allow tax-free Roth funding without sacrificing current deductions, creating optimal tax arbitrage opportunities.
•IRA Basis Recovery Strategy: Before rolling traditional IRAs into 401(k) plans to enable backdoor Roth conversions, forensically review past tax returns to identify non-deductible contributions that created basis. One couple discovered $60,000-70,000 in after-tax basis by examining eleven years of returns, allowing them to isolate and convert this amount tax-free rather than mistakenly rolling it into pretax accounts.

Notable Moment

The hosts revealed their millionaire research shows 401(k) accounts typically become the first account to cross seven figures for most millionaires, yet over 40% of investment options in major plans are affiliated with the plan provider—often representing higher-cost alternatives rather than optimal choices. This creates a paradox where the most powerful wealth-building tool simultaneously drains wealth through unnecessary fees.

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Episode Transcript

Your four zero one k is likely costing you thousands of dollars. Brent, I am so excited to talk about this because we know that the four zero one k is an unbelievable tool available to most working individuals out there, and yet it can be even though it's an amazing tool, it could be something that's potentially costing you, and you likely have the ability to change that. That's what we wanna talk about today. Well, I mean, let's let's talk about why are these so powerful. First of all, we know even from our own millionaire studies that we've done, this is the first account that most millionaires cross into 7 figures with. And there's a lot going forward. If you think about there's lots of tax incentives. You think about free money from your employer. Yep. The fact that you're getting profit sharing. There's a lot of things to get really excited about a four zero one k, so we wanna make sure that you're doing it right. But not all four zero one k's and four zero one k plans are created equal. There's actually a study done by the Department of Labor that found that of a thousand of the largest four zero one k plans out there, over half of those plans had funds that shared revenue with the plan's administrator, meaning that there was some sort of kickback, some sort of payment for the funds and the other investment options that were found in the plan. And so you may be wondering, well, is that for sure a bad thing? Well, not necessarily in every circumstance, but can it be a bad thing? And can it be an expensive thing? And can it be a costly thing? Absolutely. Well, I mean, let's let's talk about what does this mean when we find out that there's extra fees in there. We we've seen this in several different ways. I remember when we've gone and reviewed four one k plans, you see subaccount fees. Even what's amazing, usually, this is an active account. You know, if you find out somebody's there's a money manager or there's something, but I've even been surprised that they have realized that a lot of investors won't index funds. That's right. So you even have to pay attention to the way the index fund of your four one k is structured to make sure you're truly getting the low cost variety because we even found there was a plan. I'm not gonna say too many names, but there was a plan that was labeled as a Vanguard s and p 500. And then when we looked at the internal expenses, we looked at all the fine print. We found out that this thing had an internal expense ratio that was over half a percent. That's right. When we know that the the the traditional Vanguard s and p 500 is less than 10 basis points. So you got to pay …

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