Bogus 401(k) - Any Advice?

[loweyecue]

Re: Bogus 401(k) - Any Advice?

It's not that I don't want physical or ETFs or industrials ... it's that my employer's 401(k) is so restrictive that I cannot do this within it. I need (want) the tax benefits that the 401(k) provides, but do not like the options available. Right now I am 90% in a the money market option, with 10% in intermediate govt bonds. (In my personal Roth IRA I am heavily in CEF, GLD, USO, etc - I also own some, but not much, physical).

My plan does have a self-directed option - much like any off-the-street online broker. Unfortunately it is also restricted to only open ended mutual funds, for our "protection." (they are either afraid of liability or idiots and don't want us getting into ETFs or risky stocks .... meanwhile the funds they offer in the normal plan charge 1% or more in management fees, not to mention the trading spread that kills the returns...)

Uhhh, what returns? ;)

[CanuckinTX]

Re: Bogus 401(k) - Any Advice?

This is only true if your employer has negotiated the ability to have a Brokerage Link account through your 401K, not all employers do that. :mad:

That's too bad. I figured it was for anyone because our company didn't advertise this as an option whatsoever. I just happened to see something about it when I was on the Fidelity site and inquired about it.

[plinko]

Re: Bogus 401(k) - Any Advice?

I've been wondering the same things about the flexibility of my 401k as stated in this thread. This post is intended perhaps more for younger itulipers, or those who've never touched a 401k in their life (mine's been conservatively invested for the past couple years - unlike what most "fashionable financial advice" books have told younger folks to do otherwise)

Our company was recently acquired (was previously a VC-backed startup). Expecting my 401k to be terminated in the acquisition, I was giddy that I will be able to transfer assets to an IRA. Unfortunately, all 401k assets were acquired by the new company, which disgruntled me for a number of weeks.

Recently, we had an 401k informational session held by a flat-fee financial advisor/benefits broker. Only after personally ASKING ABOUT OUTSIDE INVESTMENT OPTIONS (e.g. commodities, PMs) did he mention that there was a 401k-to-stock system available, where assets are transferred to a MMKT sweep account, then can be traded for stocks/etfs/etc.

When calling the 401k provider, they told me I wouldn't be able to do this, I would have to self-fund the sweep account (no different than an IRA). Confused, I emailed the 401k broker, and he got a higher-up at the 401k firm to call me and explain my options. I am now in the process of setting up a trading account hooked up to my 401k.

Lesson to startup-employees: YOUR 401K MAY NOT GET TERMINATED IN AN M&A! It can and will get transferred as part of the acquisition! Keep this in mind as you decide whether to subscribe to your startup's 401K, especially if the startup doesn't offer any good matching incentives. Also, make sure you get your company's financial benefits broker's business card and ASK QUESTIONS!

[c1ue]

Re: Bogus 401(k) - Any Advice?

plinko,

In case you didn't catch it - iTulip has been very clear on just how good (bad) 401Ks are.

To spell it out - 401Ks are exactly like pension schemes in that the money inside the 401Ks can be used to generate revenue for the parent company. Only with 401Ks, the parent company doesn't have defined benefit obligations.

What a friggin' deal!

That's why companies have little or no incentive to liquidate 401Ks; they are part of the company's income producing structure.

[quigleydoor]

Re: Bogus 401(k) - Any Advice?

I dont think you have this option (roll over to an IRA) unless you leave the company.
If someone wants to correct me on this I am all ears. My only non-stock option in my plan is a stable value fund which yields about 4%. I'm even nervous about this. No one can get you 4% guaranteed. I fear the portfolio has some corporate bonds with an insurance wrapper. If the corps go, and the insurance goes I'm sure i will lose principle. t-bills are not in the choices. I have asked for them and been politely brushed off by those in the "know". Lets forget about adding a PM fund, or a commodities fund. When I mentioned county party risk to the 401K oversight board I had to explain it to them. BTW i work for a fortune 50 company.

FYI here is an old thread with some research I did on stable value funds over a year ago:
http://www.itulip.com/forums/showthread.php?t=1765

[runlikehe11]

Re: Bogus 401(k) - Any Advice?

This is only true if your employer has negotiated the ability to have a Brokerage Link account through your 401K, not all employers do that. :mad:

That is True, Brokerage Link is available in our company but only to salaried employees. I have submitted a request along with documentation to the Bargaining Committee to try to get this changed as our 5 year Contract runs out this weekend. So we will see.

[plinko]

Re: Bogus 401(k) - Any Advice?

plinko,

To spell it out - 401Ks are exactly like pension schemes in that the money inside the 401Ks can be used to generate revenue for the parent company. Only with 401Ks, the parent company doesn't have defined benefit obligations.

What a friggin' deal!

That's why companies have little or no incentive to liquidate 401Ks; they are part of the company's income producing structure.

Thanks c1ue! I kinda came to this realization about a year ago, when I decided to minimize my 401k contribution only to what my employer matches (Started attentively reading iTulip in late 2007, discovered it in 2006). When I graduated out of college a few years earlier, I bought a personal finance book that urged readers to maximize their 401k, and like a good little pre-iTulip boy I did :p. Now I just need to start contributing to an IRA!

[cjppjc]

Re: Bogus 401(k) - Any Advice?

http://www.youtube.com/watch?v=ympojyBTcEA

And it's gone:eek:

[Beavus]

Re: Bogus 401(k) - Any Advice?

To remove money from my 401k, I must take a hardship....

I will go back to school, take hardship to pay education expense. Get re-imbursed from company for class. take another hardship withdrawl for education for the next semester. Eventually 401k will be depleted.

Also, put money into the guarenteed interest fund if available.

Also stop the dumb up 1% per year contribution crap they are trying.

Stop all payments into 401k if possible. Why should I bother saving dollars anymore? What is the net result of everyone making the decision to stop contributing to there 401ks?

[wayiwalk]

Re: Bogus 401(k) - Any Advice?

plinko,

In case you didn't catch it - iTulip has been very clear on just how good (bad) 401Ks are.

To spell it out - 401Ks are exactly like pension schemes in that the money inside the 401Ks can be used to generate revenue for the parent company. Only with 401Ks, the parent company doesn't have defined benefit obligations.

What a friggin' deal!

That's why companies have little or no incentive to liquidate 401Ks; they are part of the company's income producing structure.

I'm confused - what is the way that a parent company uses 401Ks - are you talking about 401Ks which include company stock? I assume by parent company you mean the company that pays your salary...

[sishya]

Re: Bogus 401(k) - Any Advice?

I have Fidelity 401k and recently was able to move max half of my 401k to Fidelity Brokerage Link IRA.
Currently I have GTU, CEF and DBA in the IRA, of which DBA is showing slight profit while other 2 showing slight loss.