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401 (k) history is something I've wondered about. Why is it provided by the employer, as opposed to you choosing your own IRS-approved provider and telling your

401 (k) history is something I've wondered about. Why is it provided by the employer, as opposed to you choosing your own IRS-approved provider and telling your employer to send a portion of your check there?

ghaff 8y ago
I am by no means an expert but my understanding is that it's mostly a function of its somewhat accidental history. Which also makes things like rolling over 401(k)s from previous employers way more convoluted than it should be. You do additionally have a personal option, IRAs, that you can establish at the broker of your choice that give you a lot more flexibility. You can probably setup payroll auto-deduction in many cases.
- ams6110 8y ago
  In my experience, it's not complicated at all to roll a 401k from a previous employer into a personal IRA at provider such as Vanguard, Schwab, etc.
  - ghaff 8y ago
    I've done it and know others who have. It's "complicated" in the sense that it wasn't just click some things online. That may be a good thing from a security perspective but it's still a PITA.
walshemj 8y ago
Lobbying by employers I would guess - this is strictly verboten in the UK due to various reasons, Robert Maxwell plundering of his company's schemes for example. I am surprised that post enron that US pensions where not reformed.
- ghaff 8y ago
  You're conflating 401(k)s and pensions. 401(k) accounts are in employees' own brokerage accounts. The company can't touch them. All the company does is decide what funds and stocks to make available, do payroll deduction, and contribute whatever matching. Defined benefit pensions are different and are much less common than they used to be. So mostly they have been reformed by ceasing to exist in the US. There are various protections for pensions but they're still an issue--especially in municipalities with financial issues. ADDED: And there's actually a lot of sensitivity these days to 401(k) options that are perceived as risky. Such as a company's own stock.

ghaff 8y ago

I am by no means an expert but my understanding is that it's mostly a function of its somewhat accidental history. Which also makes things like rolling over 401(k)s from previous employers way more convoluted than it should be. You do additionally have a personal option, IRAs, that you can establish at the broker of your choice that give you a lot more flexibility. You can probably setup payroll auto-deduction in many cases.

ams6110 8y ago
In my experience, it's not complicated at all to roll a 401k from a previous employer into a personal IRA at provider such as Vanguard, Schwab, etc.
- ghaff 8y ago
  I've done it and know others who have. It's "complicated" in the sense that it wasn't just click some things online. That may be a good thing from a security perspective but it's still a PITA.

walshemj 8y ago

Lobbying by employers I would guess - this is strictly verboten in the UK due to various reasons, Robert Maxwell plundering of his company's schemes for example. I am surprised that post enron that US pensions where not reformed.

ghaff 8y ago
You're conflating 401(k)s and pensions. 401(k) accounts are in employees' own brokerage accounts. The company can't touch them. All the company does is decide what funds and stocks to make available, do payroll deduction, and contribute whatever matching. Defined benefit pensions are different and are much less common than they used to be. So mostly they have been reformed by ceasing to exist in the US. There are various protections for pensions but they're still an issue--especially in municipalities with financial issues. ADDED: And there's actually a lot of sensitivity these days to 401(k) options that are perceived as risky. Such as a company's own stock.