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Old 04-05-2015, 08:51 AM
 
Location: Eastern UP of Michigan
1,202 posts, read 682,964 times
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Quote:
Originally Posted by mysticaltyger View Post
I agree there should be some sort of mandatory 401k savings. The big problem with 401Ks is that their administrative costs are high for small businesses due to ERISA regulations. The short version of the story is the government forces employers to be "fiduciaries" and this is pretty strict and expensive. However, we already know what the best practices of fiduciaries are. All the government has to do is roll out a boilerplate plan like it offers its own employees and as long as employers follow it they would be exempt from the onerous compliance rules and regulations.
My small employer, had a 401k for a number years, with such high fees that the first 3-4%growth/earning went to fund expenses and management fees. They closed it a few years ago. I only participated because the match they provided at least exceeded the costs.

Your right about the TSP, management fees/costs on the TSP are less than through Vanguard.
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Old 04-05-2015, 11:23 AM
 
8,860 posts, read 5,139,069 times
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Quote:
Originally Posted by mysticaltyger View Post
I agree there should be some sort of mandatory 401k savings. The big problem with 401Ks is that their administrative costs are high for small businesses due to ERISA regulations. The short version of the story is the government forces employers to be "fiduciaries" and this is pretty strict and expensive. However, we already know what the best practices of fiduciaries are. All the government has to do is roll out a boilerplate plan like it offers its own employees and as long as employers follow it they would be exempt from the onerous compliance rules and regulations.

This is why I think IRA limits should be increased. We could simply end 401k, 403b, etc. and put more effort into educating the public about how to establish your own IRA. Perhaps a pamphlet could be handed out when you start a new job. Employers COULD contribute to employee traditional IRAs and write off their contribution. Employees are free to open their IRAs with low-cost providers.


I also like the idea of expanding the Retirement Saver's Credit for low-income people. It should definitely be refundable, and perhaps could have more generous income limits with a smaller credit for those who aren't really low-income.
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Old 04-05-2015, 11:35 AM
 
8,860 posts, read 5,139,069 times
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Quote:
Originally Posted by JIMANDTHOM View Post
My small employer, had a 401k for a number years, with such high fees that the first 3-4%growth/earning went to fund expenses and management fees. They closed it a few years ago. I only participated because the match they provided at least exceeded the costs.

Your right about the TSP, management fees/costs on the TSP are less than through Vanguard.
That's because taxpayers pick up part of the tab. The TSP is the very best plan in existence. People who are eligible should take full advantage.


Small employers should consider Simple IRAs instead of 401k plans. There are no fees to set up and no on-going fees for the employer. What the employee pays depends on where the plan is set up. The employer must either match each participant 100% of the first 3% they contribute, or contribute 2% of salary for each eligible employee whether or not they participate. Simple IRAs are available to companies with fewer than 100 employees. There is a provision to temporarily suspend matching if times are tough.


Another cool feature of Simple IRAs is that a single employer may have more than one established plan. My small employer has 3 plans. One of them is at Vanguard, and the employee (I wonder who she could be) who did the paperwork to establish that plan is the only one who participates in the Vanguard plan. The other employees prefer to pay loads and high fees.
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Old 04-05-2015, 05:12 PM
 
33,046 posts, read 22,067,502 times
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Quote:
Originally Posted by Petunia 100 View Post
That's because taxpayers pick up part of the tab. The TSP is the very best plan in existence. People who are eligible should take full advantage.


Small employers should consider Simple IRAs instead of 401k plans. There are no fees to set up and no on-going fees for the employer. What the employee pays depends on where the plan is set up. The employer must either match each participant 100% of the first 3% they contribute, or contribute 2% of salary for each eligible employee whether or not they participate. Simple IRAs are available to companies with fewer than 100 employees. There is a provision to temporarily suspend matching if times are tough.


Another cool feature of Simple IRAs is that a single employer may have more than one established plan. My small employer has 3 plans. One of them is at Vanguard, and the employee (I wonder who she could be) who did the paperwork to establish that plan is the only one who participates in the Vanguard plan. The other employees prefer to pay loads and high fees.

Probably some office busybody.
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Old 04-05-2015, 10:16 PM
 
8,860 posts, read 5,139,069 times
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Originally Posted by freemkt View Post
Probably some office busybody.
Probably.
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Old 04-06-2015, 02:45 PM
 
33,046 posts, read 22,067,502 times
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Quote:
Originally Posted by Petunia 100 View Post
Probably.

Who else but an office busybody would research and pick a plan, and then sell it to their employer?

So congratulations.
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Old 04-07-2015, 08:06 PM
 
Location: Eastern UP of Michigan
1,202 posts, read 682,964 times
Reputation: 1271
Quote:
Originally Posted by Petunia 100 View Post
That's because taxpayers pick up part of the tab. The TSP is the very best plan in existence. People who are eligible should take full advantage.
[quote=Petunia 100;39098483]




Didn't know that, tried to find out tho.

I do know there is a special govt bond exclusively for the TSP and the other funds are "managed" by Blackrock, unless this has changed. Except for an initial withdrawal after you retire, you have to leave it alone until you want to permanently start your periodic withdrawals.
That's about the only negative there is with the TSP.
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Old 04-07-2015, 08:49 PM
 
Location: SW MO
23,605 posts, read 31,492,863 times
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Quote:
Originally Posted by Southern man View Post
I liked this one better.
Benjamin Franklin and Compound Interest: “Money makes money. And the money that money makes, makes money”
Perfect!
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Old 04-11-2015, 06:11 PM
 
6,353 posts, read 5,163,159 times
Reputation: 8527
Quote:
Originally Posted by Petunia 100 View Post
This is why I think IRA limits should be increased. We could simply end 401k, 403b, etc. and put more effort into educating the public about how to establish your own IRA. Perhaps a pamphlet could be handed out when you start a new job. Employers COULD contribute to employee traditional IRAs and write off their contribution. Employees are free to open their IRAs with low-cost providers.


I also like the idea of expanding the Retirement Saver's Credit for low-income people. It should definitely be refundable, and perhaps could have more generous income limits with a smaller credit for those who aren't really low-income.
Actually, I think deductions for IRA contributions should be unlimited, making the income tax more of a consumption tax. If you can save a dollar, you don't pay tax on that dollar until you spend it.

The RSC is already pretty broad. Expanding it would mean that people making $100,000 would be subsidizing the retirement savings of people making $75,000, instead of keeping the money for their own retirement. Is this fair?
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Old 04-11-2015, 07:07 PM
 
26,115 posts, read 28,514,332 times
Reputation: 24817
Quote:
Originally Posted by NewToCA View Post
I'm not too impressed with the main solution of "tricking" employees into saving more for retirement by automatically enrolling them in "optional" retirement plans, and then periodically escalating the percentage of income sent to the fund.
I am. Australia has a privatized social security system where everyone has to put in something like 7% or 8% of what they earn into investment accounts. Employers match the same percentage. Wealth levels in Australia are much higher than in the US. The system works.

Since privatizing Social Security outright isn't feasible, politically or financially, universal 401K access coupled with automatic enrollment and auto escalation of contributions is the next best thing.
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