Originally Posted by rjpatt
Cliffp's post got me thinking. Why are one's employer and 401k so closely related. Why can't an individual just open a "401k" at Vanguard and contribute to it through the year. The tax deduction could be made directly on the 1040 just like an Traditional IRA. The only problem I see with this system is matching, but couldn't employees just submit documentation once a year showing their contributions and receive a check for their matching? Could a system like this work? It seems that it would eliminate a lot of bad plans.
Read why it was set up... as a salary deferral system... it only became a 'retirement' vehicle when the masses started to contribute...
Some could say you can open up an account at Vanguard... but it is called an IRA... so you would want them to change the IRA rules so you can contribute more?
As for you final question... not all plans are created equal... we just changed plans at my company and I was the one who did most of the documentation work... you can take a loan from an 401... the company matches your contribution... but our company has a vesting schedule... so if you leave, then all the money is NOT yours.. my company's plan will allow you to save as much as 90% of salary... not many companies will allow that...
The only reason a plan is 'bad' is the company wants a bad plan... my company's new plan has 82 mutual fund options... and we could have had IIRC over 1,000...