The Next-Gen 401(k)

[MachineGhost]

Whatanobrainer!

[quote=https://www.forusall.com/]In the 21st century everyone can have a 401(k).

We have a very simple goal here at ForUsAll – to make sure that every American has a fair shot at retirement success, no matter how small the company they work for or own.

Hey, it’s the 21st century – it just shouldn’t be that hard for you and your employees to plan for retirement. We designed our 401(k) to work right out of the box every step of the way. Using powerful technology, retirement best practices, and common sense, the ForUsAll 401(k) for Small Business is easy, automatic, and available to all.

Welcome to the new face of retirement.
[/quote]

[Libertarian666]

The impediment to small businesses offering 401k plans is usually the expense. Record keeping and form 5500 filing, compliance, testing, etc, make the cost of running a plan prohibitive for many small businesses. Vanguard and Fido won't even touch a plan that has less than 100 participants IIRC.

Eh, I don't think that paperwork is so bad. I have a corporate profit sharing plan that has the same stuff to deal with, and it only costs me $500/year or so to do it, and that's for a one-person plan. Presumably there would be some economies of scale if you had 20 employees or so.

I don't do it myself, of course; I hire a specialized company, "Pension Concepts and Administration" to do it.

[MachineGhost]

The impediment to small businesses offering 401k plans is usually the expense. Record keeping and form 5500 filing, compliance, testing, etc, make the cost of running a plan prohibitive for many small businesses. Vanguard and Fido won't even touch a plan that has less than 100 participants IIRC.

Eh, I don't think that paperwork is so bad. I have a corporate profit sharing plan that has the same stuff to deal with, and it only costs me $500/year or so to do it, and that's for a one-person plan. Presumably there would be some economies of scale if you had 20 employees or so.

I don't do it myself, of course; I hire a specialized company, "Pension Concepts and Administration" to do it.

Its only $95 a month for 10 people then $5 for each additional person with ForUsAll and its all Millennial tech friendly, i.e. no paperwork nonsense.  This will disrupt the traditional, stodgy, dinosaur, legacy providers such as MT works for which is mostly wake-work paper pushing, i.e .a waste of everyone's time and the planet's resources.

The first 10 are free or something like that, so you could probably get a 1 person plan for yourself for free?  If they had a Solo Roth 401(k) I'd be very interested.

[MachineGhost]

I have myself plus 2 employees, 3 total participants. You don't think almost $1200/year in admin costs is excessive? That amounts to $400/year/participant on top of MER of the mutual funds. Let's say one of my employees has $1000 saved in the account. That's a 40% charge.

Is that more or less than what you pay now?  It does seem more economical if you had 10 employees than 3.

[mathjak107]

The impediment to small businesses offering 401k plans is usually the expense. Record keeping and form 5500 filing, compliance, testing, etc, make the cost of running a plan prohibitive for many small businesses. Vanguard and Fido won't even touch a plan that has less than 100 participants IIRC.

it took us years to get enough participation so we could go to fidelity .

[MediumTex]

The market for this sort of thing is pretty limited.

If there were money to be made in this part of the market, the big fund companies would already be there (and they have been there in the past, but decided it wasn't worth the trouble).

Most people are eligible for traditional IRAs and don't max them out.  As long as the IRA option is available and not fully utilized, these "Uni-(k)"-type products will be mostly novelties.

I'm the first to admit that the retirement plan regulatory structure is absurdly complex (the IRS has scaled back their own enforcement efforts because they don't understand their own rules), but I just work in the system...I didn't create it. 

The best way to think about the U.S. retirement plan regulatory structure is like a board game that is interesting and stimulating to play, but which can get tiring at the higher levels because of the way the rules start to become counterintuitive.  The key, though, is to understand that the whole edifice has a "Dungeons and Dragons" quality to it in that it is essentially a fantasy world masquerading as a body of law and regulations.  When the fantasy starts to break down as it collides with reality, you just change the rules to keep the game going.

At the macro level, this gamer approach to regulation has basically driven traditional defined benefit pension plans to extinction, which is a terrible tragedy, since those are the only true "retirement plans" out there.  A 401(k) plan is not a retirement plan--it's just an account with some tax benefits attached to it.

Imagine a group of CFOs of medium sized companies who all sign up to play a new game called "World of ERISA-craft."  At first, it's fun.  They get some good tax deductions, they are able to help their bottom line through their DB plan's investment performance, and the employees like their retirement program.  Then the stock market tanks, interest rates fall, and corporate profits get pinched.  In the game, the CFOs encounter "The Abomination of ERISAlation" with its many tentacles and treacheries, and after a while they just start to say: "Fuck this.  This is stupid", and they just walk away completely.  I call it "compliance fatigue".

The exact same thing is happening on the health plan side of the equation.  Health care reform is going to lead to the extinction of employer-provided health coverage in the same way that ERISA led to the extinction of employer-provided defined benefit pension plans.  It's just standard government dumbassery worsening the problem it is purporting to fix.

[MachineGhost]

At the macro level, this gamer approach to regulation has basically driven traditional defined benefit pension plans to extinction, which is a terrible tragedy, since those are the only true "retirement plans" out there.  A 401(k) plan is not a retirement plan--it's just an account with some tax benefits attached to it.

Good observation.  And that's why I'm against privatizing Social Security, although I do think using a portion of your account in the public marketplace might help the feeble returns a bit.  But to go wholesale into the private markets like Chile?  No way!  All it does is become a crowded trade, depress performance and then you wind up with the same problem you had originally, except you have a lot more regulatory, fraud and compliance costs.  Sort of like Medicare.

[MachineGhost]

The exact same thing is happening on the health plan side of the equation.  Health care reform is going to lead to the extinction of employer-provided health coverage in the same way that ERISA led to the extinction of employer-provided defined benefit pension plans.  It's just standard government dumbassery worsening the problem it is purporting to fix.

That's not a bad thing.  We need portable insurance.  And true insurance, not group co-op plans.  So if their demise boosts the individual and ObamaCare markets, that will be a good thing.  And then we'll have only ObamaCare and eventually only Medicare-For-All.  Win-win!  j/k

[MediumTex]

The exact same thing is happening on the health plan side of the equation.  Health care reform is going to lead to the extinction of employer-provided health coverage in the same way that ERISA led to the extinction of employer-provided defined benefit pension plans.  It's just standard government dumbassery worsening the problem it is purporting to fix.

That's not a bad thing.  We need portable insurance.  And true insurance, not group co-op plans.  So if their demise boosts the individual and ObamaCare markets, that will be a good thing.  And then we'll have only ObamaCare and eventually only Medicare-For-All.  Win-win!  j/k

I don't know if it's a bad thing, but it's definitely not what Obama promised the American people when he was selling health care reform to them.

[MachineGhost]

I don't know if it's a bad thing, but it's definitely not what Obama promised the American people when he was selling health care reform to them.

Do you think Obama read those 33,000 pages?  We had to pass it first to see what was in it!

[MediumTex]

I don't know if it's a bad thing, but it's definitely not what Obama promised the American people when he was selling health care reform to them.

Do you think Obama read those 33,000 pages?  We had to pass it first to see what was in it!

I don't think anyone read it.  Seriously.  The way it was passed basically guaranteed that no one was able to read it.

This may sound silly, but I'm still not completely sure that the last 15 years actually happened.  I have this vague sense that I might wake up and it's December of 2000 and Gore is the President-elect, and everything that I believe happened since then was just a Planet of the Apes-style frightening alternate reality--a terrible vision of the future that you are relieved is just a bad dream.

As I look back on the last two administrations, Bush and Obama have really been that bad.  Hypocritical, cynical, cheap, dishonest, and shallow.  They are our generation's version of LBJ and Nixon--just a couple of narcissistic hacks thrust upon the country through bizarre historical quirks.  In the case of LBJ and Nixon, an assassin's bullet in Dallas set that mess in motion, whereas it was the design of the Florida ballot that set in motion the current slow motion train wreck we are living through.