Cost matters, but it is only one part of the decision. Here is how to compare your options on what you pay, how the money is managed, and who is in control.
The Verizon EISP offer has closed. If you applied, you will hear soon whether you were accepted. If you were, the next big decision is what to do with your 401(k), and it is one of the easiest to get wrong. Once you leave Verizon, you will generally choose between leaving your 401(k) where it is, rolling it into another plan, rolling it into an IRA, or cashing it out. I covered the basics of those choices in the full EISP guide. This post goes deeper into the question I get asked most: how do I compare these options fairly?
There is no single right answer for everyone. The right choice depends on your age, your other accounts, your income needs, and how you want your money managed. Most people start and stop with fees. Fees matter, and I will show you how to add them up. But I would look at four things together: what you pay, how the money is managed, how well the portfolio fits you, and who is in control of the account.
1. What You Pay: Add Up the Whole Cost
Almost every option has more than one layer of cost. The number you hear first is usually just one of them. To compare fairly, add up all of these:
● Fund costs. Every mutual fund and ETF has an expense ratio that comes out of the fund's returns. You never get a bill for it. According to the Investment Company Institute, equity mutual funds averaged 0.40% a year in 2025, and index equity ETFs averaged 0.14%. Individual funds can cost a good deal less or more than those averages, so look up each one.
● The plan fee or advisory fee. This pays for advice, management, and administration. In a group plan, it may be split among several companies. With an advisor, it is usually one fee based on the size of your account.
● Platform or administrative fees. Some accounts carry a separate fee for the firm that holds the account and handles the reporting.
For a sense of what is typical, research firm Cerulli Associates found that advisors expect to charge an average of about 1.25% a year for a client with $100,000 to invest. Fees usually come down as accounts get larger, to about 0.66% for clients with more than $10 million. Ask any advisor, including me, how their fee compares.
Small differences add up over time. The U.S. Department of Labor gives this example: on a $25,000 balance with 35 years to grow at 7% a year, paying 0.5% in total fees instead of 1.5% can mean the difference between roughly $227,000 and $163,000 at retirement. That is a 28% difference from one percentage point.
For a group plan, you can check the numbers yourself. Any plan with its own plan number files a Form 5500 with the Department of Labor every year, and Schedule C of that filing lists what each firm was paid by the plan. You can search for it free on the Department of Labor's EFAST2 website. Keep in mind that a plan's stated fee may not include the cost of the funds inside it, so look up each fund's expense ratio as well.
Here is how I handle cost. Before you move a dollar, I give you your total yearly cost in writing: what the funds cost, my advisory fee, and the platform fee. I build portfolios with ETFs, which keeps the fund layer low, and I do not earn commissions. Cost is what you pay. What matters just as much is what you get for it, and that is the rest of this post.
2. How the Money Is Managed
Two portfolios with the same mix of stocks and bonds can behave very differently. A lot of that comes down to what is on the bond side and who is watching it.
Start with bonds. When interest rates rise, the prices of existing bonds fall, and longer-term bonds are generally hit harder than short-term bonds. Many balanced portfolios keep a set mix of intermediate and long-term bond funds, whatever rates are doing.
In the portfolios I manage, I have kept the bond side in short-term and floating-rate funds while rates have been rising. If the rate picture changes, I can shift toward intermediate or longer-term bonds. No one can predict interest rates with certainty. The point is that the bond side is a decision I keep reviewing. It is not something that gets set once and left alone.
That brings up the second difference: who makes changes, and how quickly. I manage client accounts on a discretionary basis. In plain terms, when a change is needed, I can make it in your account without asking you to fill out a form or place a trade, as long as your account stays within the risk level we agreed on. I review the portfolios regularly with an advisory group at Cetera, so those decisions have a large firm's research behind them.
In a group plan, you typically choose from a menu of funds or ready-made portfolios. Those portfolios may be adjusted over time, but they are built for the whole group. Deciding which one you are in, and when to change, is up to you.
One smaller detail: I keep a small amount of cash in each portfolio to cover withdrawals and fees. That way we are not forced to sell investments at a bad time just to send you a check.
3. A Portfolio That Fits You, With Limits
Flexibility is only a good thing if it has limits. When you open an account with me, you fill out a risk tolerance questionnaire. Your answers point to a base portfolio. From there, we can move one step more conservative or one step more aggressive if your situation calls for it. Anything beyond that takes a new questionnaire.
So your portfolio can be adjusted as markets change, but it cannot drift into something riskier than you signed up for.
4. Who Is in Control of the Account
Your Verizon 401(k) is a group plan. So is a 401(k) Savings Plan offered through a union or other group. Group plans are governed by plan trustees and run by a third-party administrator. They decide which investments are on the menu, which firms are hired, and what the rules are for getting your money out.
An IRA is different. It is an individual account in your own name. There are no trustees and no administrator between you and your money. You choose the advisor, you can see every holding, and you can move the account whenever you want.
Group plans do have features worth knowing about. One is the Rule of 55, which can allow penalty-free withdrawals from an employer plan if you leave that employer in or after the year you turn 55. An IRA has its own route to penalty-free income before age 59½: a series of substantially equal periodic payments under IRS Section 72(t). If you are under 59½ and will need income, talk it through before you decide, because the rules are specific.
Here is how the three paths line up.
Your Verizon 401(k) | 401(k) Savings Plan | IRA with Pereira WM | |
Type of account | Group plan | Group plan | Individual account in your own name |
Who sets the rules | Plan trustees and a third-party administrator | Plan trustees and a third-party administrator | You, working with your advisor |
Investment choices | A menu chosen by the plan | A menu of mutual funds and ready-made portfolios chosen by the plan | ETF portfolios matched to your risk profile |
Who changes the mix | You do, unless you use a managed option in the plan | You choose the portfolio. The plan's manager maintains it for the group | Your advisor, within your risk profile, with no paperwork from you |
What you pay | Fund costs. The plan's administrative fees are paid by Verizon | Fund costs plus a plan fee for advice and administration | Fund costs plus an advisory fee and a platform fee, given to you in writing up front |
What This Means for Your Decision
None of this tells you what to do. It tells you what to ask. Before you roll your Verizon 401(k) anywhere, and before you sign any rollover paperwork, get clear answers to these questions:
● What is my total yearly cost once the funds, the advice, and any account fees are added together?
● How is the bond side built, and what happens to it if interest rates rise or fall?
● Who decides when the mix changes, and how quickly can it happen?
● What keeps my portfolio from taking more risk than I am comfortable with?
● Is the account in my name, and who sets the rules for it?
I walk Verizon retirees through exactly this comparison, using your real numbers, with no obligation and no pressure to move your money anywhere in particular. Take the time to compare before you sign anything. If you would like a second set of eyes on your options, call me at (877) 997-7113 or visit pereirawm.com.
Sources
● U.S. Department of Labor, A Look at 401(k) Plan Fees
● U.S. Department of Labor, EFAST2: Search Form 5500 Filings
● Investment Company Institute, Mutual Fund and ETF Fees Remained Near Historic Lows in 2025
● Cerulli Associates, Fee Compression and Rising Service Demands Cause Advisors to Adjust Pricing Structure (April 29, 2025)
● U.S. Securities and Exchange Commission, Investor Bulletin: Interest Rate Risk
● IRS, Retirement Topics: Exceptions to Tax on Early Distributions
● IRS, Substantially Equal Periodic Payments
Nuno T. Pereira, CTFA
President & Wealth Manager, Pereira Wealth Management
pereirawm.com · 877-997-7113 · nuno@pereirawm.com