PBS Drops Another Bombshell: #WallStreet Is Gobbling Up Two-Thirds of Your 401(k)

[BlueStreak]

24. Agreed. I have been in 4 different employer 401Ks

Last edited Mon Apr 29, 2013, 02:54 PM - Edit history (1)

throughout my career.

Rule #1, whenever you have the option to roll that into a self-directed IRA, don't lose a minute doing that. Do it immediately. You can always do that at the end of your employment with the company, and there may be other times you can get your money out of the 401K.

None of the 4 plans ever forced me to invest in the stock of my employer. That is the most abusive of all. There is one huge employer in my city. For decades, it was seen as the best place to work, but I know a lot of folks who ended up with half of their retirement money in that stock. Fortunately it never completely cratered, but it did have its ups and downs. Rule #2, never put a cent into the stock of your employer. You already have enough of your life tied up in the fortunes of that company. Don't add to the risk.

All of my 401Ks had a limited number of investment options -- typically 8 different funds. None of them had fees so high that I suspected the company was getting kickbacks, but they might have been. It probably isn't so much an actual under-the-table kickback. It is more likely that when they went out to bid for 401K processors, the ones that had the best deal for the company "coincidentally" happened to have high fund management fees charged to the employee. Is that crooked or unethical? I'd call it borderline. And that is why you want to get the money out of the company 401K just as soon as you have the opportunity.

In my experience some employers will listen to their employees. If you don't like the fund choices in your company 401K, see if other employees share that concern. If many employees make a request of HR for additional options, they might be able to get that into next year's plan. If you can be more specific about what you would like to see, that makes it easier for HR to act on the request.