Saving for retirement in a smart way is more important now than ever, as the threat of inflation looms and economic uncertainty lingers due to the coronavirus pandemic. If your employer offers a retirement savings plan, it’s worth understanding the ins and outs so you can strategize creating the best possible retirement outcome for your future.
Many American employers offer a 401(k) plan to their employees, which is a retirement savings plan that has tax advantages for the employee.
Does your company offer a 401(k) from Transamerica? Are you wondering how it compares to other plans?
We’ve put together a Transamerica 401(k) review to help you gauge the usefulness of this investment vehicle in terms of your particular retirement goals.
Transamerica Retirement Services
The Transamerica Corporation is a holding company for various investment firms and life insurance companies that primarily operate in the United States. They offer investments, retirement services, and life and supplemental health insurance.
Transamerica provides employer-sponsored retirement plans a wide variety of market segments, including:
- Higher education
They offer a number of solutions to fit the needs of various employers regardless of their size or plan type. Some of the services offered include:
- Defined contribution, 401(k), 403(b)
- Nonqualified deferred compensation (NQDC)
- Defined benefit
- Total Retirement Outsourcing
- Pooled plan arrangements, including pooled employer plans, multiple employer plans, and the Group Plan Solution
If your employer offers retirement plans through the Transamerica Corporation, you might be curious to learn more about their Roth IRA product. In the next section, we’ll delve into what you need to know.
(Curious about Empower Retirement plans? Find our review here.)
Transamerica 401(k) Review
Employer-sponsored retirement plans are often administered through specialized brokerages. If your retirement plan is provided by the Transamerica corporation, you’ll likely want to know more about the 401(k) investment option for planning your retirement.
Setting Up Your Transamerica Account
Transamerica has a user-friendly web portal that makes it easy to monitor your retirement plan. Here you’ll find account summaries, a calculator to help forecast your retirement income, and an easy and quick way to alter your annual pre-tax contribution.
Through the web portal, you can even easily set up an auto-increase setting in order to raise your level of contribution each year. Since your Transamerica account is so integrated with your payroll department, it makes saving for retirement very simple.
You can receive quarterly statements electronically or through snail mail. You can also view them as PDFs through the web portal.
Transamerica Retirement Functionality
There is also a mobile app for your Transamerica retirement account. This makes accessing your retirement account information easy as you can do it from anywhere.
(Are you hoping to retire early? Learn about the FIRE movement here.)
401(k) and 403(b) Investment Options
If you compare retirement savings plans across different providers, you’ll find that pretty much all of them allow for investment through mutual funds. Through Transamerica, you can choose lower-risk options in the form of money market funds and fixed interest rates. However, as you might expect the returns provided by these are relatively modest.
The fixed interest rate fund shows a return of roughly 2.5%. This low return is certainly less than ideal. Though there aren’t any associated fees with this type of account, which helps a little bit, it doesn’t override the negative of receiving such low ROIs.
There are also funds that are available that feature slightly better returns and have exposure to bonds. These offer about 5% each year when looking at the past ten years. However, the expense ratio can cancel out the benefits of receiving these modest returns.
Lastly, most of the investment options you have through Transamerica Retirement Services are fund that have exposure to the equities market. You can opt for classic choices like US large cap, US small cap, and S&P 500. However, there are also emerging markets and international stocks in some funds.
Transamerica 401(k) Fees
The expense ratios offered by Transamerica cover a wide range. However, they are fairly typical when compared to other retirement firms.
Some expense ratios can be as low as .02% and .05%. On the other hand, they can be as high as 1.3% if not higher. One can assume that these are actively managed funds, though Transamerica doesn’t make this clear.
When comparing data between the least expensive funds and the most expensive funds, you find that they actually had comparable performance over a period of five to ten years. Therefore, one might want to be wary of the most expensive funds offered through Transamerica.
There are a unique set of mixed-asset funds offered by Transamerica. These are based around the expected retirement date of clients. However, a mix of a lack of information and confusing expense ratios for people with earlier retirement dates makes it hard to determine whether this is really a beneficial feature.
One of the real negatives about Transamerica 401(k) options is that there is very little information available. It’s hard to find the administrative fees of the broker, which is a flat $60 each year. You can find it in the fine print of quarterly statements but nowhere in the web portal.
There is also a loan origination fee of $25 that pops up if you borrow against your retirement savings. Compared to other retirement services, this is fairly standard. There are also no fees for reallocating assets, though a lockout can occur for certain types of funds and for a period of time when moving money out of one fund and into another.
Transamerica 401(k): A Basic Retirement Savings Plan
At the end of the day, our Transamerica 401(k) review found that this is a fairly basic retirement savings plan. While there aren’t a lot of big surprises attached, you also won’t find a ton of added value here. If you’re hoping to receive advice or strategy from your 401(k) provider, you’ll likely be disappointed.
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