Quote:
Originally Posted by Aredhel
Sure they can match into an employee's 401k. The point that I was making is that (as far as I understand it) a 401k plan is fairly cumbersome for an employer to set up. Contrast that to an IRA, which a person can open in five minutes or so online using one of any number of a huge array of banks/brokerages.
Make the process of setting up a 401k plan easier for employers, and more employers are likely to offer one (with or without a match).
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I kind of doubt that.
I set my 401k up in about 5 minutes online from my couch (self-employed). There's some additional things they have to be aware of that I do not as they are not applicable for a solo 401k. That's really just highly compensated employee rules and that you can't have discriminatory 401k plans. The latter is just a stupid rule by well-intended idiots but it actually just makes it easier. There's some payroll and contribution limit stuff but that's not going to be that cumbersome to any larger company. For the smaller ones, it's an issue.
Honestly, there's nothing that special about a 401k over an IRA aside from the much higher contribution limits. That's a pretty simple fix. Just make them have the same contribution limits. I personally think 401k limits are already too high as is. $54,000 is, well, kind of a big writeoff. Having $18-20k limits for both would be much more reasonable than having a $54,000 limit for 401k and $5,500 for IRA. That's not really sufficient, which is why I bothered setting up a 401k. If you're really worried about revenue neutral, just tier it. Chop off some of the limit on the high end of 401k contribution limits and increase the IRA contribution limits.