Currently, some 401(k) plans use a few ETFs, such as TD Ameritrade. The firm began offering ETF-based 401(k)s in 2011. Other providers that are using ETFs in retirement plans include Invest n Retire LLC and ShareBuilder, Mercado reports.
Charles Schwab Corp. is readying the ETF version of its Schwab Index Advantage 401(k), set to market in the fourth quarter. [Charles Schwab Set to Launch ETF-Only 401(k) Plans]
The Center for Retirement Research at Boston College is supportive of fee reduction in retirement plans. The organization’s director, Alicia H. Munnell, proposed banning expensive actively managed mutual funds from 401(k)s and rollover IRAs. “Virtually all researchers agree that most actively managed equity funds can be expected to underperform index funds once fees are considered,” she wrote. “It makes no sense to expose the average participant to these options.” [ETFs and Retirement Accounts]
Tisha Guerrero contributed to this article.