Podcast Summary: Money Guy Show

Episode Title: Your 401(k) Might Be Costing You Thousands
Air Date: February 4, 2026
Hosts: Brian Preston & Bo Hanson

Episode Overview

This episode of the Money Guy Show zeroes in on why your 401(k)—despite being an incredible wealth-building tool—might be quietly draining thousands of dollars from your future nest egg due to hidden fees, poor fund choices, and overlooked plan features. Brian and Bo break down the industry quirks, the importance of scrutinizing your investment options, and provide actionable strategies to help listeners maximize the full potential of their 401(k) plans.

Key Discussion Points & Insights

1. The Power—and Pitfalls—of 401(k) Accounts

• Why 401(k)s Are Essential
  • "This is the first account that most millionaires cross into seven figures with." – Brian [00:30]
  • Tax incentives, employer matches, and profit sharing make 401(k)s outstanding vehicles for wealth-building.
• Not All 401(k)s Are Created Equal
  • Over half of the largest 401(k) plans include funds with revenue sharing (aka kickbacks) to the plan administrator.
    • "Of a thousand of the largest 401k plans out there, over half…had funds that shared revenue with the plan's administrator…" – Bo [00:56]
  • Not always a bad thing, but these arrangements "can be an expensive and costly thing." – Bo [01:18]

2. Hidden Fees and Fund Selection Risks

• Sub-Account and Index Fund Fees
  • Even index funds in a 401(k) can have elevated fees compared to retail versions.
    • Example: A "Vanguard S&P 500" with an expense ratio of 0.5%+ when the true retail fund is below 0.10%. – Brian [01:58]
  • Always scrutinize the fine print and internal expense ratios.
    • "Pay attention to the way the index fund of your 401k is structured to make sure you're truly getting the low cost variety." – Brian [01:58]
• Proprietary and Closet Index Funds
  • ~40% of 401(k) investment options are affiliated with the plan provider; these may not be the best or lowest-cost funds.
    • "Those are not the best funds available, those are not the lowest cost funds…not the best performing either." – Bo [03:02]
  • Warning against active managers who simply mirror indices but charge more.

3. Expense Ratio Example: The Long-Term Cost

• Comparing Revenue Sharing vs. True Index Funds
  • If two funds track the S&P 500, but one has a 0.67% fee (revenue sharing) and one a 0.015% fee (pure index), the difference, compounded, is massive.
    • "It could be in the hundreds of thousands of dollars category." – Bo [05:20]
  • Quote: "Price is what you pay, value is what you receive." – Brian [05:46]
• Conclusion: Scrutinize every option within your plan.

4. Action Steps: Advocating for Yourself and Others

• Being Your Own Advocate
  • Ask your HR or plan administrator for low-cost index options; it's often easier to enact changes than you think.
    • "Empower yourself, empower your fellow employees. Do it in a tactful way…" – Brian [07:33]
  • Real-world example of a listener improving their company’s 401(k) by simply raising questions, leading to addition of better fund choices.
• Win-win Improvements
  • Lowering costs may save both employees and employer on administrative fees.
  • Advocating for 'safe harbor' plans is beneficial for all.

5. Nuggets for 401(k) Success

• The Power of Simplicity
  • Avoid analysis paralysis from too many options—keep it simple and automatic.
    • "If you know what you can control, get out there and maximize those things. And then, set it, forget it…make it automatic for the people." – Brian [08:46]
• Set It and (Mostly) Forget It
  • Find the best, low-cost funds, automate contributions, periodically review for changes.

6. Ask the Money Guy & “It Does Not Depend” Rapid Fire Segment (31:27)

Notable Questions and Answers:

Q1: Rollover conversion to Roth IRA—lump sum or dollar cost average?

• A: Lump sum is typically best, but use the “Goldilocks Rule”:
  • If the amount is <10% of your total assets, lump sum.
  • 10%-20%: DCA over 4 months.

  • 50%: DCA over 12 months.
    "Lump sum investing historically is the best choice, but markets are up more often." – Brian [12:36]

Q2: Lowering savings rate temporarily for life needs (e.g., new car, growing family)?

• A: It’s OK to drop to 10% briefly if it's for a big one-time need. Get back on track ASAP, but always try to get employer match.
  • "Money is nothing more than a tool that allows us to achieve our goals." – Bo [17:07]
  • "Make sure you get back on track as soon as possible, and never give up the free money from your employer." – Brian [18:11]

Q3: Backdoor Roth: Should you roll traditional IRAs into 401(k) to avoid the pro rata rule?

• A: Yes, but only if your 401(k) has good investment options/low fees. Check for after-tax basis in your IRAs, which could create further Roth conversion opportunities.
  • "Don’t roll after-tax dollars into your 401(k), or you’ll lose out on tax-free conversion potential." – Bo [22:45]

Q4: Too many sinking funds and too much in cash?

• A: Yes, it’s possible to be overly conservative—reassess if you’re keeping cash tied up that could be working for you. Focus on what’s needed for the next 3 years, then invest the rest for long-term growth.
  • "Too much of a good thing can all of a sudden turn into a weird obsession or bad thing." – Brian [28:18]

7. Rapid Fire: “It Does Not Depend” (31:27–41:16)

Hosts challenged to answer quickly without saying “it depends”
Memorable moments:

• Best strategy if no 401(k): Traditional IRA (if deductible), if not then Roth IRA, then taxable brokerage. – Bo [32:28]
• $2,000 from Emergency Fund to Max Roth contribution?
  • "Yes, but don't make it a habit." – Bo & Brian [35:42]
• "88 $1 beers, or one $88 beer?"
  • “88 $1 beers would probably be all of my 2026 beer needs.” – Brian [35:08]

8. Listener Q&A: Mortgage Rates, RSUs, and More

Q: Is a 6.625% mortgage "high interest debt"?

• Not for a home loan—focus on steps to refinance when rates drop, but don’t let perfect be the enemy of good. Don’t reset your mortgage amortization when refinancing. – Bo & Brian [51:43]

Q: Hedging income when paid in private RSUs at a tech company?

• Live/safe as if the RSUs don’t exist for now; maximize saving/investing outside the private shares to diversify your risk.
  • “Don’t have all your human capital tied into the same place you’re building investment capital. Concentration builds wealth, but diversification protects it.” – Brian [56:22]

Notable Quotes

• "This is the first account that most millionaires cross into seven figures with." — Brian [00:30]
• "Price is what you pay, value is what you receive." — Brian [05:46]
• "A lot of people get so wound up thinking, ‘I can never not be exactly where I am.’…Money is nothing more than a tool that allows us to achieve and accomplish our goals. Money is not the goal in and of itself." – Bo [17:07]
• "If you can create the scenario where you say ‘hey, not only will this plan be better for me and I'll get lower cost options, but it's going to save you as the employer in terms of administration costs and it's going to be better for the coworkers’…" – Bo [08:07]

Timestamps for Important Segments

• 00:06 – 08:46: Main discussion on 401(k) fees and pitfalls
• 08:46 – 10:09: Simplifying your 401(k): action steps for individuals
• 10:09 – 31:01: Q&A with listeners (IRA conversions, savings rates, sinking funds, etc.)
• 31:27 – 41:16: “It Does Not Depend” Rapid Fire round
• 46:02 – 50:58: Brian’s “caper” story about escaping Nashville’s snowstorm and traveling to Florida
• 51:01 – 54:21: Mortgage interest rate Q&A
• 54:46 – 58:13: Hedging RSU income as a tech employee

Takeaways and Strategies

• Always review and compare the expense ratios within your 401(k)—even for "branded" index funds.
• Advocate for better fund choices with your employer or HR department; sometimes all it takes is asking.
• Don’t settle for proprietary, expensive, or “closet index” funds if better, cheaper alternatives exist.
• Keep your 401(k) allocation simple and automated, but review periodically for any plan or fee changes.
• Use the “Goldilocks Rule” when deciding on lump sum vs. dollar cost averaging lump sums.
• If paid in private stock (RSUs), live and save as if those shares don’t exist for safety.
• Refinance your mortgage wisely and don’t keep resetting your loan term when possible.
• It’s okay to temporarily adjust your savings rate for big life moments—but always get back on track.

Tone & Style

Brian and Bo maintain their signature friendly, approachable, and sometimes humorous style. They stress simple execution, being proactive, and empowering yourself and others—plus, they’re always keen to share personal stories.

Final Thoughts

401(k)s lay the groundwork for wealth, but only if you’re vigilant about hidden fees and fund quality. With a little extra legwork, and by asking the right questions, you can keep more of your money working for you—and maybe even help your coworkers along the way.

For more resources, visit: MoneyGuy.com/resources

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