4 ms·

401k’s generally have a limited number of funds available to trade. I think the reasoning is to protect the employee from poor investments. I’ve never seen one

401k’s generally have a limited number of funds available to trade. I think the reasoning is to protect the employee from poor investments. I’ve never seen one that allows you to trade on individual stocks, only funds.

lvh 6y ago
Generally, yes, but the thing you're looking for is called "self-directed" and is supported by most major providers. The nicest one if you really want to do this is probably Schwab. The problem with GP's scheme isn't that there's a good reason you can't hold whatever security you want in your retirement account: it's that you can't make the contribution in-kind from a taxable brokerage to your tax-advantaged 401(k)/IRA. It's true that that's rare: but that's because your employer is giving you a shitty 401(k). Ask me about the Latacora 401(k) one day.
riahi 6y ago
This entirely depends on the plan agreements. I’ve had hospital 401ks that use fidelity and have access to brokeragelink which lets you trade individual stocks.
gegtik 6y ago
That would track if they simply didn't offer 401k matching. If you read the article it seems more like a bait-and-switch. Employees are in a position to speculatively contribute to their 401K not knowing if the offered match is going to happen. ---- quote ---- It is the third straight year the automaker has not made any contributions to its 401(k) plan, according to the filing. The Tesla Inc. 401(k) Plan automatically enrolls participants in the plan with a deferral rate of 5% of employees' salaries with the option to contribute more, according to the plan's most recent Form 5500 filing. According to the Form 5500, the plan allows for an "employer discretionary matching and/or an employer discretionary non-elective contribution subject to certain eligibility requirements." Those requirements were not met for the 2019 plan year, according to the Form 5500. The nature of those requirements for Tesla to make contributions to the 401(k) plan was not available. The stock price for the automaker was up 695% for the year ended Dec. 31.
bob1029 6y ago
This constraint is why I've been putting more emphasis on my brokerage account. Even without tax sheltering, I have been able to outpace my retirement account's rate of growth by a very substantial margin (it's already maxed for matching purposes). There are tons of added benefits to having your money in a place where you can actually control it (i.e. buy specific stocks with no maintenance fees). I am starting to see the tax deferral status as a sales tactic to lock people into lucratively-managed funds. There are so many ridiculous constraints around how much you can contribute that the tax deferral feels meaningless once you put all of the factors together over a truly meaningful sum of money. All of that said, I am totally onboard with encouraging healthy savings habits for the masses, but for more advanced users there are definitely better options out there. To make a point specifically toward Telsa - I feel working for one of Elon's companies is sort of a risk in and of itself. You know you are going to be worked harder and maybe be compensated less. The stock offering is paltry for the average case when considering the volatility of the underlying and lack of diversification. For the advanced user case, TSLA might make perfect sense. More savvy employees may decide to trade their TSLA shares on their brokerage or directly through other platforms in order to build a more diversified portfolio.
- JKCalhoun 6y ago
  > I have been able to outpace my retirement account's rate of growth by a very substantial margin Me and my fellow bogleheads are ... skeptical.
  - lvh 6y ago
    Only if that 401(k) is invested in a bunch of low-fee index funds. I've helped people move off 401(k)s with horrible QDIAs with 2% GERs that somehow managed to lose money in _2019_.
    - JKCalhoun 6y ago
      Yes, that is exactly what I am doing.
DarmokJalad1701 6y ago
Fidelity has an option called "BrokerageLink" that allows you to invest in any stock/ETF in your 401k if your plan allows it.

lvh 6y ago

Generally, yes, but the thing you're looking for is called "self-directed" and is supported by most major providers. The nicest one if you really want to do this is probably Schwab. The problem with GP's scheme isn't that there's a good reason you can't hold whatever security you want in your retirement account: it's that you can't make the contribution in-kind from a taxable brokerage to your tax-advantaged 401(k)/IRA. It's true that that's rare: but that's because your employer is giving you a shitty 401(k). Ask me about the Latacora 401(k) one day.

riahi 6y ago

This entirely depends on the plan agreements. I’ve had hospital 401ks that use fidelity and have access to brokeragelink which lets you trade individual stocks.

gegtik 6y ago

That would track if they simply didn't offer 401k matching. If you read the article it seems more like a bait-and-switch. Employees are in a position to speculatively contribute to their 401K not knowing if the offered match is going to happen. ---- quote ---- It is the third straight year the automaker has not made any contributions to its 401(k) plan, according to the filing. The Tesla Inc. 401(k) Plan automatically enrolls participants in the plan with a deferral rate of 5% of employees' salaries with the option to contribute more, according to the plan's most recent Form 5500 filing. According to the Form 5500, the plan allows for an "employer discretionary matching and/or an employer discretionary non-elective contribution subject to certain eligibility requirements." Those requirements were not met for the 2019 plan year, according to the Form 5500. The nature of those requirements for Tesla to make contributions to the 401(k) plan was not available. The stock price for the automaker was up 695% for the year ended Dec. 31.

bob1029 6y ago

This constraint is why I've been putting more emphasis on my brokerage account. Even without tax sheltering, I have been able to outpace my retirement account's rate of growth by a very substantial margin (it's already maxed for matching purposes). There are tons of added benefits to having your money in a place where you can actually control it (i.e. buy specific stocks with no maintenance fees). I am starting to see the tax deferral status as a sales tactic to lock people into lucratively-managed funds. There are so many ridiculous constraints around how much you can contribute that the tax deferral feels meaningless once you put all of the factors together over a truly meaningful sum of money. All of that said, I am totally onboard with encouraging healthy savings habits for the masses, but for more advanced users there are definitely better options out there. To make a point specifically toward Telsa - I feel working for one of Elon's companies is sort of a risk in and of itself. You know you are going to be worked harder and maybe be compensated less. The stock offering is paltry for the average case when considering the volatility of the underlying and lack of diversification. For the advanced user case, TSLA might make perfect sense. More savvy employees may decide to trade their TSLA shares on their brokerage or directly through other platforms in order to build a more diversified portfolio.

JKCalhoun 6y ago
> I have been able to outpace my retirement account's rate of growth by a very substantial margin Me and my fellow bogleheads are ... skeptical.
- lvh 6y ago
  Only if that 401(k) is invested in a bunch of low-fee index funds. I've helped people move off 401(k)s with horrible QDIAs with 2% GERs that somehow managed to lose money in _2019_.
  - JKCalhoun 6y ago
    Yes, that is exactly what I am doing.

DarmokJalad1701 6y ago

Fidelity has an option called "BrokerageLink" that allows you to invest in any stock/ETF in your 401k if your plan allows it.