Savings Plan Policy (Policy Proposal #17)

Proposed Policy

A) Mutual funds, 401Ks, and all related saving vehicles must have all fees clearly stated within these three measurements. Fees to add new money (loads all-inclusive), annual fees all-inclusive, and redemption fees. All fees must be captured in these three categories. No exceptions. Funds cannot negotiate trades or services without paying for them. All costs must be captured. It must be stated in this simple format. Then these fees must be shown as a dollar deduction on your financial statement when they occur and a total yearly amount.

B) 401K plans should all be the same and not meet any specific ‘test’ per company. Common low cost plans must be made available to all companies so more employers will offer these plans and people can save more.

C) If your company does not provide a 401K plan, then you should be able to contribute the same 401K maximum amount to your IRA. Why do these two plans have different limits?

D) 401K plans must give you a yearly option to transfer any of your 401K balance directly to an IRA outside of the company plan.

What would this accomplish?

A) There are so many costs in this industry that are hard to determine in the legal mumbo-jumbo, small print, and things not accounted for. 95% of the public do not really understand what these fees cost them each year. The public needs clear measurements to shop for the best deal. The only way to have a competitive financial environment is to have the consumer know the true costs. The costs may be disclosed now, but the average 401K investor has no idea. This policy creates a transparent competitive financial environment.

B) Why should people be limited on their contribution if they work for a company with a bad contribution ratio? Why should every plan be different? It adds cost to have these plans evaluated and implemented. Keep it simple and low cost so more companies would participate.

C1, D1) Many companies have bad plans. Plans with few options or high costs. We need to provide savers with good plans. If the employer will not provide a good plan, then employees need other options. If an employer has no plan, why should you be restricted on how much you can save tax deferred?

Commentary

Why does the government allow financial institutions to take advantage of the consumer by charging fees without a clear measurement to compare costs? We need a competitive financial environment, not a protected market.

For companies with a bad 401K plan or no 401K plan, employees need alternative options.

It is in our best interest to have the public maximize their retirement savings and not be a burden on society.