John Oliver on Retirement Accounts last night

[travelover]

I'll never order chowder in a restaurant again.

 

[rodi]

I'll never order chowder in a restaurant again.

LOL - True!

My husband's former employer had an amazingly craptastic 401k that I posted about at the time. He contributed enough to get the match. That helped offset the front loads on the funds that had crappy expense ratios to boot.

We rolled it as soon as we could.

 

[Matthew J]

I think I found a new guy to watch for a while. Thanks. (I guess I like geek humor).

 

[Texas Proud]

I wonder if you had co workers who did not take advantage of that. My GF has many in her office who refuse to participate in the 401k that matches first 3% and 50% of next 3%. They know they are getting a pension of some sort and SS, and that is all they worry about. Spend the rest.


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Way back on my second job, the company matched dollar for dollar for the first 8%... really!!!

I used to tell some coworkers that they needed to put money aside.. some would say 'I need the money, there is no way I can put any away'.... where I would say 'put the money away and if you need some just take out a loan'....

Heck, even if you had to pay taxes and penalty on the money you were still ahead of the game big time... nope... some people are just too dumb.... and BTW, we are talking accountants and finance people....

 

[FireBug]

Good video, from an unexpected source. No wonder most people don't know who to listen to when John Oliver gives better advice than any financial services firm advertising anywhere...

I for one, have always expected JO to give solid advice

 

[BreathFree]

My 401k is through fidelity. I would pay lower fees if I rolled it over to an IRA at Vanguard but it is my understanding that the 401k has unique liability protection. Anyone else keeping theit 401k for this purpose?

 

[jazz4cash]

My 401k is through fidelity. I would pay lower fees if I rolled it over to an IRA at Vanguard but it is my understanding that the 401k has unique liability protection. Anyone else keeping theit 401k for this purpose?

No but my 401k is with Fido and I have an IRA with them that gives me access to things I can't get in the 401k. I keep the 401k because I have a stable value fund and my state has a tax break for employer retirement income. As far as liability protection it depends on which state you live in. Someone posted this link in another thread on this forum.
http://www.thetaxadviser.com/content/dam/tta/issues/2014/jan/stateirachart.pdf


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[YVRRocketSurgery]

I just had to see what the 'certification' looked like. Very officious.

View attachment 24110

I just saved $4000 and a trip to Iceland by printing this certificate...

 

[Walt34]

I just had to see what the 'certification' looked like. Very officious.

I couldn't resist either:

 

[bclover]

I like JO.
The thing is even with high fees 401K's do get people to save. My company's 401K is handled by Merrill lynch, fees are pretty middle of the road. My company matches dollar for dollar for the first 6% and if for every year that the company makes a profit and you are contributing at 6% they then throw in an extra 3%.

I'll take that deal

 

[growerVon]

My 401k is through fidelity. I would pay lower fees if I rolled it over to an IRA at Vanguard but it is my understanding that the 401k has unique liability protection. Anyone else keeping theit 401k for this purpose?

Another 401k benefit to consider is that the 401k can be accessed penalty-free earlier than an IRA; if you retire from the associated company at 55 or older, you can access withdraw without the 10% penalty vs 59.5 for IRAs. This could also be a reason to roll one's IRAs into an employer 401k prior to retiring at 55. I used to think this age-55 rule was a feature of the particular employer's 401k, but it is for all 401ks per the IRS: https://www.irs.gov/taxtopics/tc558.html

 

[MRG]

Another 401k benefit to consider is that the 401k can be accessed penalty-free earlier than an IRA; if you retire from the associated company at 55 or older, you can access withdraw without the 10% penalty vs 59.5 for IRAs. This could also be a reason to roll one's IRAs into an employer 401k prior to retiring at 55. I used to think this age-55 rule was a feature of the particular employer's 401k, but it is for all 401ks per the IRS: https://www.irs.gov/taxtopics/tc558.html

It must be spelled out in the SPD and the custodian must allow for early withdrawal. Seems odd given it is the law, however a few have found it impossible to do.

 

[samclem]

I used to think this age-55 rule was a feature of the particular employer's 401k, but it is for all 401ks per the IRS: https://www.irs.gov/taxtopics/tc558.html

There is a small problem with this withdrawal at age 55 if the 401K is a Solo 401K (for a sole proprietorship.) Since you can only do the withdrawal at age 55 if you have separated from the employer (yourself in this case), then you must terminate the business in order to meet the "separation" requirement. Once you terminate the business, there's no longer a 401K plan to do the distribution ("catch-22"), instead the money has to be rolled over to an IRA. And, as we know, there's no "age 55 rule" for IRAs.
At least that's what appears to be the case. A previous thread on this is here, and a subsequent one is here.

 

[EastWest Gal]

I sent this to one of my sisters who just retired... has told me and someone else that they just give their info to the FA... at ML...

I said they cost you a good amount of money... she continues to insist that 'we pay him nothing'.... really? You really think he works for free?

You can teach dear sis something huge: That financial advisor fee is tax deductible. That will get her to find out what that fee actually is. It should be in the quarterly statements. The fee is taken directly out of the portfolio.

She'll look for the fee because of the tax deduction. Then she'll become horrified at how much she is shelling out. Eventually she'll thank you.


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[Texas Proud]

You can teach dear sis something huge: That financial advisor fee is tax deductible. That will get her to find out what that fee actually is. It should be in the quarterly statements. The fee is taken directly out of the portfolio.

She'll look for the fee because of the tax deduction. Then she'll become horrified at how much she is shelling out. Eventually she'll thank you.


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I do not think it is since he is doing their retirement accounts... I do not think they have much saved outside of those...

Anyhow, she will not listen.... and her DH is even worse... they actually are the type of people who can benefit from a FA.... but to me they should know what he is costing them...

 

[UpAnchor]

She'll look for the fee because of the tax deduction. Then she'll become horrified at how much she is shelling out. Eventually she'll thank you.

Anyhow, she will not listen.... and her DH is even worse... they actually are the type of people who can benefit from a FA.... but to me they should know what he is costing them...

And it's possible that - like not being on top of their investment costs - they're also not really on top of their tax deductions. Or perhaps they don't itemize. I like EastWest Gal's suggestion but I can see how it might not find success in this instance.

 

[Big_Hitter]

There are certain economies of scale in k plans. Good read here regarding fee 401k fee litigation:


Uptick in Fee Litigation Reshaping 401(k) Industry | Bloomberg BNA

 

[RE2Boys]

You can teach dear sis something huge: That financial advisor fee is tax deductible. That will get her to find out what that fee actually is. It should be in the quarterly statements. The fee is taken directly out of the portfolio.

Just a note to add that advisor fees paid to manage a retirement account are only deductible on an individual's tax return if one pays the fee from money that is outside the retirement plan. If the fee is deducted from money inside the plan, it is not deductibe.

 

[H2ODude]

When my wife started working for the public school system in Duval County there were over 20 companies to invest in for her 403b. All but 2 were insurance companies with annuities. Unfortunately the other options were bad too but we had to make a choice. In our case it was ML who tried to get us into mutual funds with an assortment of fees and loads. They even tried to convince us to let them buy and sell funds as the stock market changed. Instead we had them put the money into a money market account which we periodically moved to Vanguard Wellesley even though initially they said it could not be done. I don't know much about investing (and still don't) but I did the best I could to find a way to protect her retirement savings. Glad I started reading posts from here and Morningstar years ago. Too many people get ripped off. Thanks everyone at EarlyRetirement.org .

Cheers!

So I guess that'd be Duval County FL? That where as a general gov employee I jumped big time into the relatively new phenomena of 457 plans in 1980. At that time these were I believe only offered through insurance companies (ours was) and were about as transparent as a lump of coal. Few choices (stock, bond, or fixed) and the performance was not all that great although at that time I wasn't that adept at comparing to indexes. All I knew was the tax avoidance was Huuuuuge. Unfortunately we were stuck with no choice, and as soon as I learned after i left, that there came a time I could flip it all to my IRA I did. It was also interesting that technically your 457 remained a city asset in the event of bankruptcy.

I have no doubt from my government experience and reading what little I do about Jax pension plan fiascos there was some serious shenanigans going on in the selection of the provider. I'll just stop there.

 

[GravitySucks]

Helped DGF cash her 401K out. We couldn't believe how little it actually earned so started looking at the small print. Most funds had sales fees and high management fees.
One fund had a 5% sales fee and a 1.75% yearly management fee.
This was a small twenty something person company, so I can see where they might have not been able to negotiate a great plan, but these were just abysmal.

 

[papadad111]

That's what you get when you have a bunch of HR people running the benefits programs - they get "sold to" by the industry and are not educated in the right manner to know better. Better to also have the financial / types at the table too. Actually some financial types are nearly as bad.

 

[MichaelB]

That's what you get when you have a bunch of HR people running the benefits programs - they get "sold to" by the industry and are not educated in the right manner to know better. Better to also have the financial / types at the table too. Actually some financial types are nearly as bad.

My experience in corporate decision making points to the "financial types" as the primary decision makers who understand very clearly the impact of the products that are chosen.

 

[Big_Hitter]

My experience in corporate decision making points to the "financial types" as the primary decision makers who understand very clearly the impact of the products that are chosen.

+100

 

[Blueskies123]

This should be required watching for anyone wanting to know about retirement. I just watched the re-run on HBO.

 

[Chuckanut]

Here's one person's take on Mr. Oliver's advice:

Don’t take retirement advice from John Oliver — Quartz

Investing in an index fund can’t help you figure out how much you are supposed to spend in your first year of retirement, or five years thence, or what your stock/bond allocation should be once you’ve stopped working. These are hard questions.

A better strategy focuses on income. This may include buying a fixed-life annuity, a more sophisticated bond strategy, or dividend-oriented stocks.

A successful retirement strategy takes good planning. Index funds are great, but investing for retirement is harder than it looks.