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Not sure if this is legal or not, but this is definitely why I think the 401k/private saving model is the best. It's a lot easier for governments/corps to chang

Not sure if this is legal or not, but this is definitely why I think the 401k/private saving model is the best. It's a lot easier for governments/corps to change the payout of a system they run vs. clawing money away from an account you own. That being said there should be a minimum safety net for those that don't have the diligence to save by their own accord.

Retric 7y ago
Personal 401k’s don’t offer much over saving directly. It has some tax advantages at the individual level, but those tax savings are just shifting money around at the societal level. The upside of public / private pensions is pooling money among a pool of survivors. Rather than saving X money to live off of at 95 while risking dying sooner you essentially save less on a bet that will live to be 95. Die early and you don’t care about losing that bet. Of course this means less money for people to inherit. Sadly for individuals it’s illegal to set contracts up to do this as they create incentives to kill people which have resulted in past murders. Annuity‘s can offer some of the benefits, but are forced to make less risky investments.
- _ah 7y ago
  The "death contract" is a Tontine. https://en.m.wikipedia.org/wiki/Tontine https://en.m.wikipedia.org/wiki/Tontine
  - deleted 7y ago
    [deleted]
- nerdponx 7y ago
  Personal 401k’s don’t offer much over saving directly. I beg to differ. My IRA doesn't offer a 6% match.
  - Retric 7y ago
    That’s a company 401k with matching funds. Clearly, if the company is willing to give you more money that’s a benefit, but you don’t get that opening a 401k at fidelity etc.
    - sokoloff 7y ago
      Unless you're employing yourself, you don't get to open a 401(k) at Fidelity yourself.
      - Retric 7y ago
        While true, it’s also common with 15.5 million workers filing a 1099 each year. Also, while an IRA is generally the same thing they have much lower annual contribution limits making the 401k a better option for many.
- jonathankoren 7y ago
  That’s not why New York, et al, banned them. They became horribly mismanaged and turned into scams that paid out far less than they offered. The idea that these encourage murders only came after they were banned, and used in plot devices that required a small number of people. (e.g the Fighting Hellfish) There is plenty of discussion about brining them back as financial instrument. https://www.npr.org/2015/11/27/457392597/live-long-and-prosper-reviving-an-idea-for-income-in-old-age https://www.npr.org/2015/11/27/457392597/live-long-and-prosp... https://www.npr.org/2017/10/26/560152250/a-case-for-tontines-a-morbid-mix-of-retirement-plan-and-lottery https://www.npr.org/2017/10/26/560152250/a-case-for-tontines...
golover721 7y ago
Sadly companies never really have contributed much to employee 401ks which was one of the main selling points when being offered as an alternative to pensions. Employees are very lucky if employers contribute 50% of their contributions (which would would be a max possible of $9500 match this year). And usually it’s significantly less. In 2019 employers are allowed to contribute up to $36000. No company I have heard of provides anyway near that. The 401k has unfortunately allowed employers to care very little about employees retirement.
- mercutio2 7y ago
  Many (perhaps not most? I haven’t researched broadly) large companies offer 100% match for 401k contributions, up to 6% of your salary. If you say the denizens of the companies I’ve worked at are all very lucky, I won’t disagree, but it’s surprising to hear this is uncommon. EDIT: Or perhaps your percentages are (unusually, for US conversations about 401k contributions) referring to total outlay, by which standard a 100% match is a company covering 50% of the total outlay? But in that case the limit is no where near $9500, perhaps you were missing a 1 in front? The max employee contribution to a 401k was $18,500 in 2018...
  - golover721 7y ago
    The max employee contribution in 2019 is $19000 so given a 50% match the employer would pay $9500. I know a number of large tech companies offer this. But it still way under what they COULD contribute. And you are right most companies are way under that 50% match up to the individual limit example. EDIT: Sorry just reread your comment, yes that’s another way companies will structure it x% match up to y% of your salary. The x and y differ wildly. Also some will add a up to z total match. Which kind of formula works out best for you highly depends on your salary. But the average employer contribution for someone maxing out their personal contribution is $3000.
technofiend 7y ago
> but this is definitely why I think the 401k/private saving model is the best. Not sure if it made outside just the Houston news cycle at the time but as an employee of a competitor I heard from friends at Enron that their employer froze all sales of their stock in employee 401ks before going under. Lou Pai managed to cash out as part of a divorce settlement as documented here https://www.chron.com/business/enron/article/Ex-Enron-exec-Pai-target-in-many-lawsuits-2066163.php https://www.chron.com/business/enron/article/Ex-Enron-exec-P... but most employees were not able to divest themselves and protect their retirement.
- javagram 7y ago
  Definitely don’t put your own company’s stock in your 401k. The 401k plans I’ve seen all had an option to invest the money in a diverse fund. Either a target date retirement fund that auto allocated to a mix of stocks and bonds, or to other funds such as an S&P 500 index. Freezing employee stock sales is fairly normal as I understand it. I get emails all the time from my publicly traded employer stating I cannot trade in their stock during certain times (due to the risk of insider trading).
  - technofiend 7y ago
    Freezing stock to prevent insider trading is one thing... Freezing it to prevent a stock price crash and buy the company a few more days at the expense of employees is another.
    - javagram 7y ago
      In the case of a company going bankrupt I could certainly seeing the lawyers ordering a trading freeze to prevent insider trading. That said, I looked it up and it seems like the claim at the time was there was an “administrative change” to the plan during that period, so not what I speculated it might be.
undersuit 7y ago
Highly compensated employees in Amazon can't contribute the total yearly amount to their 401ks. >In the simplest terms, contributions made by HCE’s can’t be excessive when compared to those of non-HCE’s. For example, if the average plan contribution by non-HCE’s is 4%, then the most an HCE can contribute is 6%. Not that I hear much complaining about the compensation, they're rolling in after-tax dollars and RSUs.

Retric 7y ago

Personal 401k’s don’t offer much over saving directly. It has some tax advantages at the individual level, but those tax savings are just shifting money around at the societal level. The upside of public / private pensions is pooling money among a pool of survivors. Rather than saving X money to live off of at 95 while risking dying sooner you essentially save less on a bet that will live to be 95. Die early and you don’t care about losing that bet. Of course this means less money for people to inherit. Sadly for individuals it’s illegal to set contracts up to do this as they create incentives to kill people which have resulted in past murders. Annuity‘s can offer some of the benefits, but are forced to make less risky investments.

_ah 7y ago
The "death contract" is a Tontine. https://en.m.wikipedia.org/wiki/Tontine https://en.m.wikipedia.org/wiki/Tontine
- deleted 7y ago
  [deleted]
nerdponx 7y ago
Personal 401k’s don’t offer much over saving directly. I beg to differ. My IRA doesn't offer a 6% match.
- Retric 7y ago
  That’s a company 401k with matching funds. Clearly, if the company is willing to give you more money that’s a benefit, but you don’t get that opening a 401k at fidelity etc.
  - sokoloff 7y ago
    Unless you're employing yourself, you don't get to open a 401(k) at Fidelity yourself.
    - Retric 7y ago
      While true, it’s also common with 15.5 million workers filing a 1099 each year. Also, while an IRA is generally the same thing they have much lower annual contribution limits making the 401k a better option for many.
jonathankoren 7y ago
That’s not why New York, et al, banned them. They became horribly mismanaged and turned into scams that paid out far less than they offered. The idea that these encourage murders only came after they were banned, and used in plot devices that required a small number of people. (e.g the Fighting Hellfish) There is plenty of discussion about brining them back as financial instrument. https://www.npr.org/2015/11/27/457392597/live-long-and-prosper-reviving-an-idea-for-income-in-old-age https://www.npr.org/2015/11/27/457392597/live-long-and-prosp... https://www.npr.org/2017/10/26/560152250/a-case-for-tontines-a-morbid-mix-of-retirement-plan-and-lottery https://www.npr.org/2017/10/26/560152250/a-case-for-tontines...

golover721 7y ago

Sadly companies never really have contributed much to employee 401ks which was one of the main selling points when being offered as an alternative to pensions. Employees are very lucky if employers contribute 50% of their contributions (which would would be a max possible of $9500 match this year). And usually it’s significantly less. In 2019 employers are allowed to contribute up to $36000. No company I have heard of provides anyway near that. The 401k has unfortunately allowed employers to care very little about employees retirement.

mercutio2 7y ago
Many (perhaps not most? I haven’t researched broadly) large companies offer 100% match for 401k contributions, up to 6% of your salary. If you say the denizens of the companies I’ve worked at are all very lucky, I won’t disagree, but it’s surprising to hear this is uncommon. EDIT: Or perhaps your percentages are (unusually, for US conversations about 401k contributions) referring to total outlay, by which standard a 100% match is a company covering 50% of the total outlay? But in that case the limit is no where near $9500, perhaps you were missing a 1 in front? The max employee contribution to a 401k was $18,500 in 2018...
- golover721 7y ago
  The max employee contribution in 2019 is $19000 so given a 50% match the employer would pay $9500. I know a number of large tech companies offer this. But it still way under what they COULD contribute. And you are right most companies are way under that 50% match up to the individual limit example. EDIT: Sorry just reread your comment, yes that’s another way companies will structure it x% match up to y% of your salary. The x and y differ wildly. Also some will add a up to z total match. Which kind of formula works out best for you highly depends on your salary. But the average employer contribution for someone maxing out their personal contribution is $3000.

technofiend 7y ago

> but this is definitely why I think the 401k/private saving model is the best. Not sure if it made outside just the Houston news cycle at the time but as an employee of a competitor I heard from friends at Enron that their employer froze all sales of their stock in employee 401ks before going under. Lou Pai managed to cash out as part of a divorce settlement as documented here https://www.chron.com/business/enron/article/Ex-Enron-exec-Pai-target-in-many-lawsuits-2066163.php https://www.chron.com/business/enron/article/Ex-Enron-exec-P... but most employees were not able to divest themselves and protect their retirement.

javagram 7y ago
Definitely don’t put your own company’s stock in your 401k. The 401k plans I’ve seen all had an option to invest the money in a diverse fund. Either a target date retirement fund that auto allocated to a mix of stocks and bonds, or to other funds such as an S&P 500 index. Freezing employee stock sales is fairly normal as I understand it. I get emails all the time from my publicly traded employer stating I cannot trade in their stock during certain times (due to the risk of insider trading).
- technofiend 7y ago
  Freezing stock to prevent insider trading is one thing... Freezing it to prevent a stock price crash and buy the company a few more days at the expense of employees is another.
  - javagram 7y ago
    In the case of a company going bankrupt I could certainly seeing the lawyers ordering a trading freeze to prevent insider trading. That said, I looked it up and it seems like the claim at the time was there was an “administrative change” to the plan during that period, so not what I speculated it might be.

undersuit 7y ago

Highly compensated employees in Amazon can't contribute the total yearly amount to their 401ks. >In the simplest terms, contributions made by HCE’s can’t be excessive when compared to those of non-HCE’s. For example, if the average plan contribution by non-HCE’s is 4%, then the most an HCE can contribute is 6%. Not that I hear much complaining about the compensation, they're rolling in after-tax dollars and RSUs.