Personally, I applaud this decision. It should be illegal only offer a fund-based retirement account. Company provided 401k funds are nothing but kickbacks to Wall Street.
I wish I could specify which financial provider I wanted to use for managing my accoiunt, provide info similar to ACH info for direct deposit, and go from there (ditto with HSA). Instead, I have to remember to roll-over 401k account assets after I change jobs, something I cannot do immediately and easily forget about.
For HSA, you can do a variation of that: open a separate HSA anywhere you want and set up recurring monthly trustee-to-trustee (i.e. direct) transfers of your payroll contributions plus any employer contributions from one HSA to the other. This can all happen while you're employed.
You still need to make sure to adjust the transfer amounts any time you or your employer contributes less to the employer-affiliated HSA, generally avoid overdrawing either account, and make sure to count your contributions only once per year at tax time. But there are no other downsides.
I get that what you're describing would be "better" but sounds like a very small deal. How often are you switching jobs that rolling all those 401ks is a real burden?
The reality behind it is that 401k administration is a heavy and expensive process and the reason it's all pooled together at one provider is that. Obviously once you're done, you can take it anywhere into an IRA.
> I get that what you're describing would be "better" but sounds like a very small deal. How often are you switching jobs that rolling all those 401ks is a real burden?
It's not just the rollovers when you switch jobs. It's also being locked into whatever funds (and fees) the plan your company selected offers. Especially given you can go standup a full 401k for yourself if you are self employed for free (at Fidelity amongst other places).
The fund is based on 10Y treasury bonds which have significantly underperformed the S&P historically. First 3 years, you get a 6% guaranteed return. The remainder, you get only 3% guaranteed. For reference, my HYSA yields 4% a year.
Presumably IBM invests this money and pockets the difference. What a scheme - your employee retirement plan is actually a profit center. Fucked up that this could be allowed to happen.
Plus most importantly it's non-portable. You're dependent on their good will (hah!) for the ability to retrieve it from them in the future at whatever (partial) rate they decide they can get away with.
I thought they were criminals for going to lump sum match. This is net level stuff...
And you’re comfortable with being tied to your company in retirement? Are you comfortable with not being able to easily transfer your money when you change jobs?
I agree with you but this isn’t a true pension. It’s just an investment strategy that offers yields that barely cover inflation. If it were a true pension with x% of your take home monthly after you retire till death I would be on board with your comment. In this case the 401k is the lesser of the two evils.