Quote:
Originally posted by sebastian_dangerfield
1. Thats not what I said, but I agree with your non-reply.
2. The admin costs should be born by the person who holds the investment, rather than an employer. If the business was not manging a pension, it would have ZERO expenses, right? You got an option that beats $0.00 in admin expenses?
3. I'm not justifying my own choices at all. IRAs are a good way for people to save. But its goddamned sad thing that business has to play nanny.
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Your view of business as nanny misses a few points:
1) Companies use benefits such as 401ks as recruiting tools. As many people have pointed out, any costs of the administration of those plans is part of the overall cost of employee compensation. Businesses now offer these plans as a method of remaining competitive in the employee marketplace.
2) I think employees do bear the burden of administrative costs for a 401k plan, to some extent, and in some manner. I don't know the exact mechanics, but fund admin expenses are often passed on to contributors to 401k plans. if they're not, then they are a cost of employee compensation, just like salary, health benefits, etc.
3) Further, institutional investment plans create economies of scale that individual plans do not. That's why it can be more attractive to invest in a 401k than in one's individual IRA, notwithstanding the significant differences in the maximum allowable contributions and the tax deferral. Ever try to buy an individual health plan?
4) If there were no institutional plans but rather only individual plans, there would likely be less money invested in the stock market, and therefore less capital available to corporations.
5) If people save less because it's harder and more confusing and more expensive to do so individuall, somebody is going to bear that burden when they are old and poor, and it's not going to be corporate America.
So business playing "nanny" to employees ain't entirely altruistic or wasteful.
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