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TransAmerica 401k Retirement Plan Review

2022 TransAmerica 401(k) plan review. TransAmerica retirement account performance, minimum, rating, investing cost, and fees. TransAmerica vs Vanguard comparison.

TransAmerica 401k Plan Overview

Planning for retirement can be stressful but in today's time, it can also be easier than ever. This is attributed to the many financial resources available on the internet and often times through the very financial institutions which offer retirement products. One of these institutions is called TransAmerica Retirement Solutions. TransAmerica offers a wide range of services, including company sponsored 401k plans. With TransAmerica, customers can expect helpful tools and a wealth of support to put them on track for retirement.

TransAmerica Fees and Investments

Through different mergers and acquisitions, Transamerica has been serving customers for 100 years. Under their 401k plans, they offer quite a few investment choices. These include short term, long term, and aggressive bonds, small, mid, and large-cap stocks, international stocks, and multi-asset target date stocks. There are 34 different options across these different investments with expense ratios varying from 0.58% to 1.45%.

The Pros

Expense ratio can really help or hinder a number of gains on investments. These little fees can add up over time. That is why having the option to pick funds with low expense ratios is one benefit of TransAmerica's 401k plan. Although these fees aren't as low as other many other options available outside of company 401k plans, there are decent options. Expense ratios under 1% are ideal and the majority of TransAmerica's investment options offer expense ratios under 1%. Expense ratios can be located on the company's website so customers have this information readily available when they need it.

To assist customers with managing their portfolios, there is a tool called PortfolioXpress® provided on the company's website. PortfolioXpress® automatically rebalances retirement portfolios based on risk preference and anticipated retirement year. Some customers prefer a hands-off approach to their finances. This option provides added convenience to these customers by relieving them of initially selecting funds and continuously monitoring performance.

There is another tool on the company's website called Are you OnTrack®? The purpose of this tool is to deliver a personalized retirement income analysis. This tool predicts the annual or monthly income once a customer retires based on his or her current investing strategy. This kind of analysis helps to put the future in perspective and can demonstrate if there need to be more savings or if it is acceptable to continue with the current path.

Having access to this information and these tools online is great. The website user interface is simple and easy to navigate. Once logged in, the overview screen gives an at-a-glance view of the account's current balance and year to date rate of return. The navigational sidebar is organized so that important links and information are just a click away. All the research a person would need to do to make decisions for their plans can be done right on the website. There are fact sheets for each stock option which note its Morningstar rating, past performance, and top 10 holdings. Furthermore, all transactions can be completed online, such as changing investment allocations or contribution rates. This is especially convenient during the plan's open enrollment plan. One less visit to HR!

The Cons

As mentioned before, expense ratios are crucial. The higher expense ratios in this 401k plan will hinder a person's returns in the long run. This is the only major challenge affecting TransAmerica's 401k plan. The majority of the funds with expense ratios over 1% are the large cap growth options and the international options. These stocks generally have a greater opportunity for high returns but customers should still be mindful of the cost associated. TransAmerica's plan also offers BlackRock target index funds with expense rates of .85%. Vanguard Target funds are definitely preferred as their expense ratios are much lower.

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TransAmerica vs Vanguard

In the financial world, Vanguard is best known for having the lowest expense ratios, with mutual fund expense ratios averaging 0.12%. Having a 401k full of Vanguard options would be ideal, however, the options available depend heavily on the employer. This is why it is hard to compare 401k plans to other kinds of 401k plans. Factors like the size of the company, the amount employees contribute, and the employer's out of pocket total all affect what kinds of funds will be offered and their expense ratio.

Vanguard Mutual Funds

In the scope of retirement options, a 401k offers higher contribution limits than an IRA. A person can contribute up to $17,500 a year meanwhile an IRA is maxed out at $5,500. A 401k often comes with employer match and customers can invest pretax dollars and earn tax-deferred gains. A 401k also has limited flexibility since the only options available are ones selected by the employer. Sometimes these choices are great, other times not so much. However, an employer sponsored 401k, like those offered by TransAmerica, is a valuable component of a retirement portfolio.

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TransAmerica 401(k) Review Summary

The TransAmerica 401k naturally has some benefits and some areas that need improving. Its website is easy to use and provides added convenience by offering tools which essentially do all the heavy lifting. All transactions can be completed online, which is something many people can appreciate. The biggest factor is the expense ratios. Most expense ratios are reasonable but if the plan offered some Vanguard options, the plan would become that much better. Planning for retirement is important and contrary to popular belief, it doesn't have to be hard. Having access to good options and an accompanying set of tools will help a person achieve his or her financial goals.