Can you own ETF’s in your Minnesota company 401(k)?

Last month, Reuters published an informative article on the tremendous growth of exchange trade funds.

The author, Beth Pinsker, asked the same question that I run into several times a month from individual Minnesota company 401(k) retirement plan investment advice prospects.

“Why can’t I buy the same ETF’s that I own outside my company 401(k) account in my Minnesota company 401(k) account?”

The answer, like most things in the financial services industry, is about money. What company gets paid what money from what company?

Mutual fund companies pay company 401(k) retirement plan providers for the shelf space of their mutual funds on company 401(k) retirement plan menus. Offering lower cost ETF’s would stop that “pay-for-play” arrangement.

In today’s environment, the best available opportunity to own ETF’s in your company 401(k) retirement plan account is through the brokerage window or SDBA (self-directed brokerage account) option.

Ric Lager
Lager & Company, Inc.