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Started By
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re: Are any of y'all anti- 401K or IRA
Posted on 5/3/13 at 9:45 am to Springfield XD
Posted on 5/3/13 at 9:45 am to Springfield XD
quote:Please elaborate on this point. How exactly does the company get a 'kickback'?
Employers get HUGE kickbacks from fund managers to drop all their (our, actually) money into them.
1
Posted on 5/3/13 at 9:46 am to LSURussian
quote:
I like the idea but I'm not sure how that would work when it comes to the employer matching contributions.
A employee's plan would have to be approved, but any reputable fund company wouldn't have a problem.
quote:
Most companies would not want employees to have access to the company's contribution any time the employee felt like withdrawing it.
Are you referring to the vesting of the employer's contribution. That's a good point.
Posted on 5/3/13 at 9:50 am to LSURussian
quote:
quote:
Employers get HUGE kickbacks from fund managers to drop all their (our, actually) money into them.
Please elaborate on this point. How exactly does the company get a 'kickback'?
Employer drops my money into a mutual fund I could get on my own. Fund has an expense ration of "x." Fund sends a check back to employer of x-y. Y being their payoff for giving them all the business. "Kickback" is the wrong word; implying illegal activity. Rebates of this sort are common and legal. I don't like them in this case because the employer is trading my freedom for their money.
Posted on 5/3/13 at 9:50 am to LSURussian
quote:
Most companies would not want employees to have access to the company's contribution any time the employee felt like withdrawing it.
Curious why you think it's a great infringement of liberty for the gov't to control an employees' retirement accounts, but aok for the employer to control them. Why shouldn't the employee have total control?
Posted on 5/3/13 at 9:52 am to ZereauxSum
quote:
How to potentially get up to DOUBLE DIGIT RETURNS On Your Money, With ZERO Market Risk.
Or potentially lose double digits on your money too. Of course the tout doesn't say that.
Sadly, there are people out there who will fall for crap like this.
There are possible improvements to the 401(k) but it's still a good deal. For example, some plans restrict you to only investing in approved funds.
True story: I noticed that Vanguard offered an ETF and an index fund that both tracked the same index. The ETF had a lower expense ratio *and* a lower transaction cost. But my 401(k) administrator forbids buying ETF's because they are afraid I might day trade.
Posted on 5/3/13 at 9:55 am to Springfield XD
quote:What? How does your response address my question about the employer's money going into someone's IRA?
A employee's plan would have to be approved, but any reputable fund company wouldn't have a problem.
quote:Part of it is vesting but also if the money went directly into the employee's IRA, he could withdraw it anytime, pay the taxes and penalty and not have a retirement fund.
Are you referring to the vesting of the employer's contribution.
Posted on 5/3/13 at 10:06 am to Cold Cous Cous
quote:Did you overlook the part where I specified the employer maintaining control over its own money?
but aok for the employer to control them.
quote:Not over the company's money.
Why shouldn't the employee have total control?
Posted on 5/3/13 at 10:07 am to foshizzle
quote:
Or potentially lose double digits on your money too. Of course the tout doesn't say that.
No no no...it says
quote:
With ZERO Market Risk
You'll never lose anything
quote:
The ETF had a lower expense ratio *and* a lower transaction cost. But my 401(k) administrator forbids buying ETF's because they are afraid I might day trade.
I guess I understand the rationale (especially if they match and you are vested in the match) but it still sucks. 401K plans could def be less restrictive but it's still the best option for most people.
Posted on 5/3/13 at 10:07 am to Springfield XD
quote:
Of course this will never happen. Employers get HUGE kickbacks from fund managers to drop all their (our, actually) money into them. No different than making you use a company cc for expenses.
This is not true. You'll get a cut in fees by having enough of a minimum investment to go up in share classes, especially if you can get to an institutional class. That is in no way a kickback.
Posted on 5/3/13 at 10:08 am to Cold Cous Cous
quote:
Why shouldn't the employee have total control?
The most commonly-cited reason is that adminstrators are worried that employees might do something foolish and then sue for not controlling them. It's a dumb lawsuit but it still costs money to defend it. Plus some people in the general public actually buy that silliness.
Posted on 5/3/13 at 10:10 am to Springfield XD
quote:Which is illegal. You should report that violation and get a whistle blower reward.
. Fund has an expense ration of "x." Fund sends a check back to employer of x-y.
quote:No, they are not and no, they are not. If you can provide a link backing up your claim, I'd like to see it.
Rebates of this sort are common and legal.
Posted on 5/3/13 at 10:11 am to TheWiz
quote:
Back to the prior example. The perfect investment at 12.55% average has your $10,000 growing to $494,767 in 33 years. However, the real ending value (factoring real gains and real losses) has you at $323,889! The losses cost you $170,878! Recall the conversation that you probably had with "your guy"..."Hang in there, the markets will come back, they always do, you just have to ride it out, don't bail out now...." This advice sounds great, but in real life it cost you $170,878! How many years of retirement income is that for you?
What a crock of shite. They want advisors to know the EXACT date to get in and out? Seriously?
Posted on 5/3/13 at 10:12 am to TheWiz
quote:
A bit of a side note, the IRA was created around 1974 and the 401(k) in 1980. People turning 65 today were about 25 when the IRA was created by ERISA in 1974...could the lack of financial security with today's crop of new retirees be a coincidence?
That's one hell of an extrapolation.
It couldn't possibly have anything to do with the fact that millions of people live at least partially in credit for much of their lives? The fact that Americans as a whole suck at saving?
I know people, college educated people that do zero retirement planning. None. They don't contribute to company 401k and they don't invest independently. I think a lot of them think that SS is going to carry them.
Posted on 5/3/13 at 10:15 am to foshizzle
quote:
It's a dumb lawsuit
Yes I am familiar with these
And I understand that some people are just literally incapable of handling their own business; probably more people than I would like to admit. Hell some of them even run pension funds The problem is, once you start to go down this road of people can't be trusted to make their own decisions, I don't see how you reach a logical stopping point before "the gov't must take control." I certainly think folks should have the option of surrendering the decisionmaking power, and for many that's probably the right choice.
Posted on 5/3/13 at 10:17 am to Cold Cous Cous
quote:Please address my previous response to you about the employer maintaining control over its money.
Cold Cous Cous
Posted on 5/3/13 at 10:29 am to LSURussian
quote:
Please address my previous response to you about the employer maintaining control over its money.
No employer is required to put a dime of its own money into any employee's retirement account. They may choose to do so, and yeah, if they do there's potential downside risk. But - and correct me if I'm wrong - I believe that, as it currently stands, if the unvested match goes down in value and the employee quits prior to vesting, the employer is equally s.o.l. to the extent it's lost money in the meantime. Such is life.
But even accpeting that an employer has a valid concern, this doesn't explain why the employer should also have control over the employee's money. By definition the "employer's" money can never be more than 50% of the account, correct? And in most cases less than that; in many cases zero.
Let me analogize, because it's what I love to do
: this is like saying a "minority shareholder" in the account (the employer) gets to call the shots, to protect its investment. But the "majority shareholder" (the employee) is the one with the most skin in the game. If I'm misunderstanding something please enlighten me.
Posted on 5/3/13 at 10:34 am to Cold Cous Cous
quote:
By definition the "employer's" money can never be more than 50% of the account, correct? And in most cases less than that; in many cases zero.
I don't think that's right. I think employers can contribute independently of the employee contribution. Someone will clarify though.
Posted on 5/3/13 at 10:36 am to TheWiz
what are yall's thoughts on 401K if NOTHING is matched?
Posted on 5/3/13 at 10:41 am to Cold Cous Cous
quote:Yeah, so? Employer's DO put money in 401(k) plans to match what employees do in order to encourage participation.
No employer is required to put a dime of its own money into any employee's retirement account.
No employer is required to even provide a 401(k) plan.
quote:No employee is required to put money into a 401(k) plan as a condition of employment. Not legally anyway.
this doesn't explain why the employer should also have control over the employee's money.
There are plans where the employee has total control over all the money in his account. Those are, in effect, an employer funded IRA. So if an employee craves such a plan, he can always go work for a company that does that.
The downside is the employee withdraws the money, pays the taxes and 10% penalty (if he's under 59 1/2) and then has zero left for retirement or a rainy day. I realize no one should be protected from their own stupidity, but in the real world some employers actually do want their employees to have some money put away for when they retire.
quote:What? Where did you get that from?
By definition the "employer's" money can never be more than 50% of the account, correct?
Posted on 5/3/13 at 10:41 am to ZereauxSum
My bad, you're right. I know in some cases employers can contribute at a more than 1:1 ratio (ie, put in 1.10 for every dollar). I'm not sure the precise limits of this though. So accounts where >50% of the value is the employer's $ exist, but are about as common as a hen's tooth.
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