Bonnie Bauman of Ignites reports on a new offering of 401(k) plans using exchange traded funds.  401K Retirement Solutions now offers Select Sector SPDRS to 401(k) plan participants.

One of the challenges facing an ETF 401(k) is the trading cost.  Since buying and selling ETFs involves a commission, it can get pricey for someone automatically investing each month.  401K Retirement Solutions said they have relationships with financial institutions, where they can wrap the entire expense, including the trading cost, as one annual fee.

There is demand for ETF 401(k) plans, and firms are out there trying to fulfill the demand.  However, there are still skeptics.  They don’t understand how ETFs are lower cost or why one would want to trade throughout the day in their 401(k) plan.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.