Why can I not change who I invest with>? This should be something that every person regardless of the company you work for can do. This would keep them honest instead of locking us into prison with one firm. Is there anyone trying to stop this in congress and improve our chances of having some money when we retire? The system seems strangely skewed against us? That is why I'm hearing some of the younger employees laughing and saying that they are not giving their money away to 401K. What do they know that I don't ?
No one seems to be trusting in the American banking system? Should I be investing in China?
Edward great question YES their are people trying to change the system. That is the main focus of 408 (b) 2 & 404a5. The 401k plan is to be run for the sole benefit of the participants and their beneficiaries. I strongly encourage you to go to HR and bring a few co-workers along and ask Why do we have these invetsment choices in our plan? who decided on these options? What method was used to make this decision? Is there a committee? If so how do I get on it? Google 404 a5 and 408 b2 bring the articles to HR ask are we prepared for these disclosures? Odds are HR will not have the answers and will tell you they will get back to you. if you feel you have not recieved the answers you were looking for, take it to senior mang. As stated by a few others here, they are Fiduciaries and have a big liability exposure with the plan. They can address it internally and correct things or risk the DOL coming to audit the plan or getting sued by a disgruntled participant.
Hi Edward, The plan sponsors (employers) have a fiduciary duty to supply employees with a prudent investment lineup. Many employers do not realize that they are personally liable for any fiduciary breaches. The risk and liability to offer a plan which is open to all investments would be expensive and impossible to monitor for imprudent investments. Your best alternative is to seek help in building a globally diversified portfolio with the correct risk level for your situation. If you cannot accomplsih with the investment choices available ask your employer why not? Finally, don't give up on America and the free markets.
Every employee also has a responsibility to fight for their benefits. If enough employees raise their concern at meetings and bring their issues to management, you can start the change process. The administration and sponsors of your current plan are fiduciaries. They have a legal requirement to do what is best for the participants. They can have a financial judgement brought against them if their duties have been breached.
The retirement system is changing this year. And hopefully will continue to evolve for the better in the future. This is exactly why I started my business. To help participants and employers to have a better chance of a secure retirement.
@ Edward. I would also be curious how you define "high fees". As Brice mentioned, there are other options outside of your 401k, albeit, you won't get the benefit of the larger amounts you can sock away.
Another option is to go the self-employed route. That way you can create your own retirement plan and won't feel "locked in" to someone else's plan.
Hi Edward, How do you define "high fees"? Also, you do have several options for saving for retirement. You can open up tradtitional IRA or a Roth IRA, a tx-deferred annuity, savings bonds, a brokerage account. It sounds like you have an ax to grind, but aren't sure what to do with it once it is sharp. In other words, do not fall for the prevailing attitudes of negativity. America and capitalism have improved the standard of living for the entire word and created more wealth for more people than any other system. China repesents an oppurtunity to the exent that they recognize contract law and personal property(which they currently do not). Cheer up!
I think you'll find that most advisors you speak with are happy to see the new regulations for fee disclosure. Many people feel think 401(k) plans are free and the least expensive choice for investing. That's because many of the fees associated with 401(k) plans are currently not disclosed.
I am not sure what you define as high fees. If you looked up yor company's plan on Bright Scope and the fees your plan is paying is high, definitely take that to HR. I have seen some less than wonderful plans over time, and some really good ones.
As for young people saying they won't put their money in a 401(k) plan, I think it may be more a justification on their part to spend more now and not save. While I do see that, I also see new grads in their first new jobs socking away the maximum they can right off the bat. I have done planning for 30-somthing employees with mid six figure 401(k) plan balances. I usually hear a lament from some clients their employers don't provide a 401(k) or other retirement plan.
It can be difficult to feel good paying fees. When you buy a TV or a lawn mower you have something you can put your hands on and touch. With fees, there is rarely something you can point at and say, "This is what I am getting for my money." It's doubly difficult when you know you are paying something, but not how much and for what.
I prefer to know what I am paying and what I am getting for my money. The new disclosure rules will help people not only understand what they pay, but also know what questions to ask if they don't understand what they read. While it's not perfect, I would still prefer to invest through the US infrastructure than elsewhere (and I have been to exchanges outside the US).
Don't thow out the baby with the bathwater yet. There is a fair amoutn of complexity to these arrangements. Without more information about your situation, it is difficult to comment on your fund lineup or costs. Fidelity may be providing custody and/or the front-end (what you log into). From what we have seen, Fidelity's user interface is pretty good. Actually Fidelity has some very good, low-cost products, both actively managed mutual funds and index funds. Even when Fidelity is providing the most of the services, there can be other outside managers and funds on the platform.
You may want to learn more about the particulars, and the alternatives, before you discuss the issues with the powers that be. Real knowlege and understanding will give you a stronger position. Knowlege is strenght.
After you have done your homework, you may find that the situation is truely bad. You should begin by getting a copy of your plan summary description. On this site you will find how to ask your plan adminstrator to provide you with the information necessary to make a carefull assessment of your plan. Then you can use the information to see how your plan compares to similar plans.
You will find a factsheet on the new DOL 408(b)2 regulations athttp://www.dol.gov/ebsa/newsroom/fs408b2finalreg.html