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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 399.01+0.1%4:00 PM EST
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To: TobagoJack who wrote (95627)10/18/2012 9:10:36 AM
From: carranza2  Read Replies (1) of 218602
 
ERISA essentially was a vehicle through which traditional retirement vehicles, such as pensions, were substituted by 401k's. A 401k is essentially an investment account to which the employee contributes pre tax income with some contribution by the employer. It grows tax free until retirement age. Several investment options are available. The employer has a legal duty to educate the employee on investments, but I would say very few 'get it'. The education function is pro forma, mostly.

After age 59.5, an employee can withdraw moolah but must then pay income tax.

That's the bare bones; the detailed rules are far more complex.

Very few of the lower paid people take advantage of it. They cannot afford to. When they do set up an account, they often borrow from it or spend it even though there are penalties incurred for doing so.

All a vehicle to get corporations out of the very expensive pension game. Even the federal government no longer offers pensions at former levels.

A good idea in theory, but terrible in practice because bottom tiers don't take advantage of them. A significant reason why few Americans are ready for retirement.

I made my former firm open up investment choices, insisting on self directed plans under which the participant can invest in anything he wants, including individual stocks. Made tidy profits in INTC, MSFT, CSCO and QCOM using my account.
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