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Teachers Pay High Fees for Retirement Funds

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Re: Teachers Pay High Fees for Retirement Funds

#31

Post by harikb »

Ididntdothis wrote: post #4
lotsofpulp wrote: post #3

I don't see any reason an employer or union wouldn't offer Vanguard/Fidelity/Schwab for 401k/HSA with access to the I assume they're probably getting some kickback or something from the arrangement of restricting the 401k/HSA member's funds to high fee investments. Edit: At least for an HSA, one can transfer the funds out into a Fidelity HSA account immediately. With a 401k, you have to wait until you leave your empl…

I don’t understand why 401k even exists. The money should go into an IRA controlled by the owner. The employer should have no say in this. The same should go for health insurance....

Edit: See jlmorton's correction below. Creation was indeed accidental. Leaving my comment unchanged.

When 401k-s originally started, it was considered ground-breaking in that it was a way for employers to use their purchasing power (or choosing power) to get lower cost management of funds. It was envisioned as a great thing for employees and employers.

But we all know that is now how new laws are created. A bunch of lobbyists from financial sector lobbied to create this new instrument, which in turn directs more money to them.

Any instrument where the employee doesn't get to control the management of the money is bad for the employee.

There is a similar situation with FSA (Flexible Spending Account). That is day light robbery. Employee has to guestimate how much medical expenses they have in the year. Estimate too little and you lose the tax savings. Estimate too much and the FSA management organization keeps the unspent money. What was originally deducted from your paycheck doesn't come back to you with a 10% additional penalty. No, the person loses 100%. FSA says the money goes to the employer to offset the management costs. This is like the real-estate sales person claiming the seller is paying them.

Re: Teachers Pay High Fees for Retirement Funds

#32

Post by downerending »

lotsofpulp wrote: post #3

I don't see any reason an employer or union wouldn't offer Vanguard/Fidelity/Schwab for 401k/HSA with access to the I assume they're probably getting some kickback or something from the arrangement of restricting the 401k/HSA member's funds to high fee investments. Edit: At least for an HSA, one can transfer the funds out into a Fidelity HSA account immediately. With a 401k, you have to wait until you leave your empl…

ER is important, but general account maintenance fees also count. I was quite surprised at how high Fidelity's are compared to Vanguard.

Re: Teachers Pay High Fees for Retirement Funds

#33

Post by aphextron »

ummonk wrote: post #28
aphextron wrote: post #6

Unions are not perfect. But they are the only protection individual laborers have left against the unstoppable power of modern corporations. Don't ever fall for the endless slandering laid against them by capitalists.

Unions are often rent-seeking monopolies. Labor organization is important, but that doesn't mean those claiming to organize labor are actually always doing what is in labor's best interests.

>Unions are often rent-seeking monopolies.

And so are corporations. Unions at least have the interest of employees as their central (espoused) tenant. There is and always has been a concerted effort between capital and the media to undermine that fact in the mind of the public. This is a huge contributing factor to the falling bargaining power of labor over the last 50 years. Don't fall for it.

Re: Teachers Pay High Fees for Retirement Funds

#34

Post by jlmorton »

Ididntdothis wrote: post #4
lotsofpulp wrote: post #3

I don't see any reason an employer or union wouldn't offer Vanguard/Fidelity/Schwab for 401k/HSA with access to the I assume they're probably getting some kickback or something from the arrangement of restricting the 401k/HSA member's funds to high fee investments. Edit: At least for an HSA, one can transfer the funds out into a Fidelity HSA account immediately. With a 401k, you have to wait until you leave your empl…

I don’t understand why 401k even exists. The money should go into an IRA controlled by the owner. The employer should have no say in this. The same should go for health insurance....

It exists as a historic accident. It was not originally intended as a retirement savings program, but simply a way to help a small number of rich people avoid tax on deferred income invested in the stock market.

Though the program has become widely popular, it's still very clearly a giveaway to the rich. Not only are the wealthy capable of saving a larger amount, we also allow their employers to contribute up to $56,000. Obviously, most employers are not going to contribute $56,000 to their employees retirement savings plan.

Up to 80% of the tax expenditure of 401k plans is captured by the top quintile of income earners. The plans amount to welfare for the wealthy, and indeed the government loses more revenue from these tax expenditures than it spends on many welfare programs like food stamps.

Re: Teachers Pay High Fees for Retirement Funds

#36

Post by lotsofpulp »

downerending wrote: post #32
lotsofpulp wrote: post #3

I don't see any reason an employer or union wouldn't offer Vanguard/Fidelity/Schwab for 401k/HSA with access to the I assume they're probably getting some kickback or something from the arrangement of restricting the 401k/HSA member's funds to high fee investments. Edit: At least for an HSA, one can transfer the funds out into a Fidelity HSA account immediately. With a 401k, you have to wait until you leave your empl…

ER is important, but general account maintenance fees also count. I was quite surprised at how high Fidelity's are compared to Vanguard.

I was under the impression that there basically were no fees for for Fidelity and the other big brokerages:

https://www.fidelity.com/why-fidelity/pricing-fees

I do see that Fidelity charges $48 per year per account to employers that want to use an HSA though:

https://www.fidelity.com/bin-public/060_www_fidelity_com/doc...

I guess they might have different fees for consumer accounts vs employers, but I have a hard time imagining that they would be more expensive than any other option, given that their whole business seems to be driven by the desire to gain as many AUM as possible by lowering expenses.

Re: Teachers Pay High Fees for Retirement Funds

#38

Post by aianus »

aphextron wrote: post #33
ummonk wrote: post #28

Earlier quoted context omitted.

Unions are often rent-seeking monopolies. Labor organization is important, but that doesn't mean those claiming to organize labor are actually always doing what is in labor's best interests.

>Unions are often rent-seeking monopolies. And so are corporations. Unions at least have the interest of employees as their central (espoused) tenant. There is and always has been a concerted effort between capital and the media to undermine that fact in the mind of the public. This is a huge contributing factor to the falling bargaining power of labor over the last 50 years. Don't fall for it.

Don't condescend to me. The only bargaining power is the ability to switch jobs easily -- something unions specifically fight against.

Re: Teachers Pay High Fees for Retirement Funds

#39

Post by lotsofpulp »

aianus wrote: post #38
aphextron wrote: post #33

Earlier quoted context omitted.

>Unions are often rent-seeking monopolies. And so are corporations. Unions at least have the interest of employees as their central (espoused) tenant. There is and always has been a concerted effort between capital and the media to undermine that fact in the mind of the public. This is a huge contributing factor to the falling bargaining power of labor over the last 50 years. Don't fall for it.

Don't condescend to me. The only bargaining power is the ability to switch jobs easily -- something unions specifically fight against.

A seller gains bargaining power by increasing the number of buyers, and/or decreasing the number of sellers. Therefore, there is an increase in bargaining power by unionizing, since it reduces the number of sellers.
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