Voya Financial Retirement is a retirement investment company that focuses on helping clients plan for and achieve financial security in retirement. This article will glaze at the different types of Voya Financial retirements that are available to you, as well as some advice for getting started with your retirement account today!
Voya Financial 401K Plan, IRA Fees, and Retirement Account
Voya, like other financial giants, provides a comprehensive range of financial services such as employee retirement and life insurance benefits, individual retirement and investments, and expert investment and wealth management.
In an attempt to become the trusted and lighthearted retirement partner of choice for Generation X’ers and Millennials, Voya aims to be the amusing yet reliable retirement partner firm.
Voya’s First Impression
One of the most appealing aspects about Voya is that their home screen displays the user’s Voya account balance and incorporates information from other accounts that may be linked. Voya then utilizes that data to provide visuals that help users keep track of how far they’ve come in terms of their objectives.
Voya Investment Options
Voya offers a wide range of financial accounts and services in comparison to the competition; however, members who have accounts through their employer may be restricted in which investment options they can choose.
Those who wish to invest in a hands-off manner should look for a Roth or traditional 401(k) with target retirement dates at five-year intervals from 2025 to 2055, with individual cost ratios ranging from 0.69 percent to 0.75 percent. These ratios are on top of Voya’s account-level administrative costs, which are already calculated for you.
If you want to create your own portfolio, traditional investment options like mutual funds, exchange-traded funds (ETFs), and short-term investments are available. While these choices differ by employer, Voya has done a nice job at balancing index funds, growth and high yield stocks, bonds, and cap value-dependent funds.
Other well-known names, such as Vanguard and T. Rowe Price, have contributed to the list. It’s no surprise that these funds have a wider range of expense ratios, ranging from 0.04 percent (a Vanguard index fund) to 0.96 percent (for a mid-cap value Artisan fund).
Paycheck preferences, fund transfers, and balance relocations can all be managed online with ease. Online investors can anticipate finding the same tools that other online brokers provide, such as retirement calculators, automatic withholding rate correction tools, a messaging center, internet statements, and personal money management solutions. While these tools may appear to be more advanced than others at first glance, it’s worth noting that almost all businesses provide their clients with the same basic capabilities.
Voya, like most other investment management firms, charges a uniform administrative charge that varies based on the account balance, account type, and/or employer profile. According to their website, Voya provides managed portfolio options with fees ranging from 0.95% to 2.00%, yet a short calculation on one user’s quarterly statement revealed an administrative charge of almost 3.5 percent.
Unfortunately, these costs are not explicitly stated anywhere in a user’s online account profile. Finding the administrative fee on a quarterly statement necessitates a manual calculation from currency into a percentage, as well as the understanding that “Other Debits” includes administration fees.
“Other/Distribution” is a catch-all phrase that encompasses Voya’s professional management fees. These charges are itemized on a user’s statement by the fund, making calculating the overall costs difficult for average investors.
Despite the fact that these other Visa fees, such as distribution costs, loan costs, and check delivery expenses, still apply, they are determined by the account type and/or employer profile. In this case, fee transparency is not one of Voya’s strengths, despite their competitors providing more detailed breakdowns of real administrative costs considerably.
With consumers demanding more honesty from their financial institutions than ever before, this is a transformation that Voya should make in the near future to keep up with their brand’s emphasis on customer care.
How to Find & Calculate VOYA 401(k) Fees
Step 1 – Gather the Necessary Documents
To figure out your VOYA 401(k) costs, you’ll need three things:
Summary of Investment Expenses and Indirect Compensation:
The Department of Labor requires VOYA to disclose the 408(b)(2) fee to employers. This document includes plant-wide information about VOYA’s administration fees. This data is intended to assist employers in evaluating the “reasonableness” of these costs.
Statement of Assets Report:
This document (called “Investment Allocation”) breaks down how much money is invested in each fund in your company’s 401(k) plan. These are also available on the employer’s website every year.
TPA Services Agreement:
VOYA does not provide third-party administration (TPA) services, one of the three administration services that every 401(k) plan demands. Instead, an unrelated (usually local) TPA provides these services. As a result, you’ll need to account for your TPA’s costs in your VOYA fee calculation. Your TPA’s fees may be disclosed in a services agreement or invoice.
Step 2 – Locate VOYA’s Direct 401(k) Fees
The most common type of 401(k) administrative fee is a direct fee, which can be deducted from participant accounts or paid out of a corporate bank account. Indirect fees are charged from investment fund expenditures, reducing the fund’s yearly returns.
The most straightforward and apparent in fees are the ones known as flat costs. VOYA, on the other hand, rarely charged any of their charges this way.
Your TPA is the only entity that incurs any direct costs for your VOYA policy.
Step 3 – Unveil VOYA’s Hidden 401(k) Fees
The fund expenses of plan investments account for the vast majority (98 percent) of VOYA administration costs. Two types of “indirect” fees exist:
Revenue Sharing Fees: Revenue sharing is a strategy for mutual funds to increase profits by adding non-investment-related costs to the operational expenses of the fund, which lowers plan participants’ investment returns. These additional charges then compensate plan service providers, who are reimbursed in this manner. There are two general forms:
- 12b-1 fees – generally compensate an insurance agent or broker.
- Sub-Transfer Agency (sub-TA) fees – generally compensate a recordkeeper.
Wrap Fees: Variable annuities are also popular alternatives to mutual funds as 401(k) investments. A variable annuity is a mutual fund wrapped in a thin layer of insurance with additional fees and withdrawal restrictions. There are also other fees, many of which include a “wrap” cost that can significantly raise the fund’s underlying expense ratio. By more than 1% on occasion!
The VOYA fee disclosure does not list revenue sharing or wrap fees as hard dollars, making them easy to overlook.
Step 4 – Calculate Your All-In 401(k) Fee
In this stage, you’ll input the information you discovered into a spreadsheet to determine your plan’s overall cost, which is known as the “all-in” price (administration costs + investment expenses).
First, enter the fund data from your VOYA 408(b)(2) and Statement of Assets documents into the spreadsheet. The calculations will automatically calculate your indirect costs.
Next, you need to add your direct fees.
If VOYA charges a direct fee, add it to your spreadsheet. Then include your TPA’s annual charge.
Evaluate Your Admin Fees on a Per-Capita Basis
Take a look at VOYA’s administration fees on a per-capita (i.e., headcount) basis after you’ve calculated your plan’s all-in cost.
Excess administration costs, which are essentially fees that exceed the level of service provided by your 401(k) provider, might not be immediately apparent if only evaluated on an all-in basis with investment expenses. This is mainly true if your plan has a large number of assets.
Simply divide the administration fee total from your spreadsheet by the number of participants in your plan to get a per-capita cost.
Is Voya Worth the Extra Fees?
Regarding fee transparency and its limited choice of funds, Voyager leaves a lot to be desired compared to Vanguard, Erade, and TD Ameritrade. The in-house target retirement funds of Fidelity, Schwab, and T. Rowe Price are also more expensive, with the same (or lesser) overall performance as Vanguard’s comparable funds, but the only significant difference is that your online account can link to external investment accounts.
While Voya may offer a more polished financial planning and retirement dashboard, the additional costs associated with a few additional pixels are difficult to justify for most investors.
On the other hand, there’s no need for a Voya member to make a quick transfer. It’s evident that Voya’s objective is to make investing as painless and as possible; the extra costs might be offset by an employer match or perhaps tax advantages available from invested wisely.
Plus, for individuals thinking about Voya, one of the finest features of a Voya individual account is that the minimum initial investment of $5,000 is waived if you deposit at least $100 per month. There’s also reason to believe that this feature gives Voya a distinct edge in recruiting their millennial consumers, despite the fact that quarterly maintenance and/or online trade fees still apply.
Without a large up-front payment, coupled with continued pressure to cut charges to stay competitive, the ability to set up an account quickly and easily should be more than enough reason for new members to choose Voya among their many other potential investments. Opening a second brokerage account with a top-rated broker, such as TD Ameritrade, appears to be the most practical and secure option.
Retirement is an important chapter of life, and it’s one that many people are not looking forward to. Voya Financial’s retirement experts are here to help you plan for your future. They provide unbiased guidance on how much money should be set aside, what types of investments make sense and how best to manage your savings so that they can grow over time while providing the flexibility needed in uncertain economic times.