What to Do When Your Employer’s Retirement Plan Sucks #AskTheMoneyGuy Subscribe today to stay up to date with our latest shows and highlight videos …

7 replies
  1. jackpast
    jackpast says:

    Hi guys! My 401K rules say that the company contribution is not vested for 3 years. What exactly does that mean? If I leave the company before that, do I lose that $? Thanks!

  2. tomj528
    tomj528 says:

    Many years ago my wife took a job at a small title company that was owned in large part by a bank. The 401k was run by the bank's investment "professional". I couldn't believe the options available with expense ratios of over 4%, multiple loads as high as 6% and all for under-performing funds. After speaking with him he tried to convince me that these charges were "normal" and the funds were vastly superior to index funds. This was before you could take legal action to force your employer to make changes so after mulling it over and deciding that the market wasn't going anywhere soon I had my wife put it all into cash. This really pissed the "investment professional" off and that's the kicker. When my wife left that place after 2 years, I immediately rolled over her 401k into her IRA which, while it had earned nothing, was far better off with not having been plundered by high fees AND the market had dropped about 15% over that time period. Sometimes the best solution is not readily apparent but you can always find a way.

  3. Hezekiah Domowski
    Hezekiah Domowski says:

    I wish you could have talked more about getting the match, but then rolling that into a more private account where you can choose.
    We have a simple IRA plan at my work, and I don't plan on leaving, but I would like to take some (all?) of that money and move it into an index fund, but I don't know if that's a wise idea – maybe it's not possible. My understanding is that pulling money from the employer fund has fees, especially if I don't wait long enough.

  4. Common Sense NOT too common
    Common Sense NOT too common says:

    Not exactly.
    Since the employer plan sucks you might want to forget it unless it is a good match depending on your income and wage.
    I would suggest to first contribute to a ROTH IRA in a free brokerage account. So many people would do better unless they want to contribute more than the $6000 or $7000 if over 50.
    Do NOT underestimate the difference a few points mean on the yearly yield.
    Be aggressively invested. Just $6000 put away each year from 30 to 65 at 8% return ends up being $1.03 million
    BUT, Just $6000 put away each year from 30 to 65 at 12% return ends up being $2.59 million
    The consistent drum beat acting like annual yield does not matter is just not true. Mutual funds have been proven to rarely beat the index. Stay aggressive because it pays especially when you get over $100,000.
    I have become a millionaire being aggressively long this bull market. Up 120.34% in 2019 and up 7.18% in 2020 so far.


Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *