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> You can contribute more if you have access to a 401k. The current limit there is $18,500. What's the argument for having two different tiers of retirement ac
by jogjayr 9y ago
> You can contribute more if you have access to a 401k. The current limit there is $18,500.
What's the argument for having two different tiers of retirement accounts? Just let everyone contribute $18k to an IRA and end 401Ks entirely. The selection of funds in most company 401K plans is meager and the funds are expensive because the contributors are, in effect, a captive market.
- harryh 9y agoAs far as I can tell there is no good reason and it's an artifact of a somewhat confused legislative process. I definitely think the US system of tax deferred retirement accounts could be simplified significantly. I do think there is some advantage to the fact that it's possible to have a portion of one's paycheck go directly to a 401k without ever hitting your bank account. You can't currently do that with an IRA. It seems like that could be fixed though.
- lotsofpulp 9y agoThe simplest and in my opinion, the likeliest explanation, is that it gives large employers who can afford to offer 401k another advantage over smaller employers. Just like being able to offer tax exempt health insurance. It gets even stupider when you realize that IRAs have limits on deductibility when your spouse has access to 401k, but you don't.