How to Tell if You Have a Good 401(k) Plan

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This article quotes Matthew D. Hutcheson as a retirement plan expert of some sort. That is misleading. Mattew D. Hutcheson a known charlatan who is currently being investigated by the Department of Labor:
http://www.canadianbusiness.com/article/50434--workers-ask-idaho-fiduciary-where-is-their-money

GentleGethsemane of NY 6:35PM October 19, 2011

Actually, if you work for a large company, chances are that BrightScope has your plan in their database and can compare the quality of your plan to your company's peers. Check out www.brightscope.com, very cool site.
mike
www.protect-my-401k.com

Mike of TX 11:53PM November 24, 2010

Actually the gentleman "Bill" is correct on some of his points but I would like to point out two things. First many 401k plans now allow participants to have a ROTH option inside their 401k with the larger funding limits of a 401k. If your 401k does not currently offer this option, ask your employer to add it. While it is true that you cannot take the money out tax free until 59 1/2, it will be tax free. On the ROTH IRA, actually you can take your contributions backout at any time regardless of age. You just cannot take any gains on your contributions out until two rules are met. You have to be at least 59 1/2 AND the ROTH IRA account has to have existed for at least five years. Also, if you have a ROTH 401k balance, leave your employer and have a ROTH you can roll your ROTH 4012k balance into your ROTH IRA and get access to all the money right away IF you have the met affore mentioned 2 rules. So I tell my clients to just start a small ROTH IRA tat least to "start the clock" on the five year rule so when you are 59 1/2 so you are good to go on tax free withdrawals.

AV of ND 12:47AM September 03, 2010

i find it interesting that no one analyses for the future..... with any 401K ; both you and your employer are merely rewarding the government for "allowing" you to invest in THEIR future retirement... in the form of a growing source of taxation for them whenever you eventually gain access to those funds... they contribute NOTHING!!! (although you are tricked into thinking they 'contribute' by not collecting the tax this year. Didn't you notice that they are increasing taxes (drastically in the future) and in 30 years you will be in an astronomically higher 'bracket' ...just as you ADD this further 401K withdrawal to your Total Taxable Income!!! ...and what do you think a dollar will buy in 30 years? ...probably a ton less than you could imagine today!
...it's all a suckers game....
there are a myriad of ways to avoid this scenario.... but no one is talking about them.
The only one they do 'mention' is a ROTH IRA ...although it does pull your money out of the scam.... it still does NOT allow you to access that money till you are 60 without substantial penalties... Wake up people!

bill reinhardt of FL 10:47AM September 02, 2010

Bob there is no way the expense ratios are .025%. Even Vanguards flagship SP500 fund is .08%. I would guess the govt is closer to 2.5% than .025%

ks1 of CA 7:25PM September 01, 2010

One of the most important considerations is the expense ratio of the funds. If you have a 2% expense ratio then your ability to match market averages over time is very limited and 4-5% makes it just about impossible.
Plans should try and emulate the federal TSP plan that the military and civilian workers can participate in, the average fund expense ratio is 0.025%. You have a choice of 2 bond funds, a common stock fund, a small cap stock fund, and a international fund. They also offer several lifecycle funds that are a blend of the above.
A couple more choices would be nice but the low cost of the funds make the TSP a winner.

bobc47 of MA 10:07AM August 31, 2010

This article misses two points:
1. ERISA 3(38) Fiduciary Compliance: what makes a good 401(k), from an employer's perspective, is that it is in compliance with ERISA. Additionally, many employers are, unknowingly, liable for investment losses in the plan.
2. Active Money Management: A good 401(k) provides employees with the option of using active money managers (read RIAs) to manage their investments. We all know that the average investor is dangerous to themselves when it comes to choosing investments. So then, why do we not provide the average investor with a professional to manage investments on their behalf. No, I'm not talking about handcuffed mutual fund managers. I'm referring to utilizing RIAs as an option in a 401(k).
Sadly, the average 401(k) participant doesn't have a chance of accumulating enough money in their 401(k) to maintain or improve their standard of living in retirement. The investments, time, and experienced professional assistance just isn't there.

Tom of AZ 1:55PM August 30, 2010