Today, directly or indirectly (“back door”), every wage earner can contribute to a Roth IRA. So, to benefit your (great)(grand)child through “long term investing”, you might consider funding a Roth IRA and/or Roth 401k.
Basic Members
The most pertinent issue may not be the fiduciary imperative, but the marketing imperative. This makes things extremely difficult for the 401k plan sponsor who may sometimes confuse which has priority. Here’s an example of why a plan sponsor might be concerned.
Do you know the answers to the most important MEP/PEP questions – or do you only think you know the answers to the most important MEP/PEP questions?
“That is one of the key weaknesses of the SEC’s Reg BI. It allows brokers to claim they are working in an investor’s best interest without being held to a legal duty of loyalty”
If plan sponsors want to alleviate retirement angst among plan participants, they need to ensure they provide full transparency regarding factors that extend beyond the plan. Plan sponsors have an obligation to explain their retirement benefits within the context of these outside factors.
Despite the better intentions of finance professors a generation ago, the market regularly fails the efficiency test. The scary reality is not a question of what degree of market inefficiency exists, it’s that market inefficiency exists at all. And that can harm investors.
Ultimately, if you want to protect yourself and others from making simple mistakes, you must embrace the sin that first birthed those missteps.
The proliferation of investment options promised participants a plug-and-play plan. In the process, it created a 401k Frankenstein monster of a mess.
Unless state-sponsored efforts can defy the stultifying reality of any political process, they are unlikely to pivot fast enough to overcome the fast-paced offerings coming from these private sector offerings.
The good news is 401k plan sponsors don’t need to treat this as a solo act. They’ve already got a team of hired hands to help them.
