[whisk3rs]

The dependence of 401k plans on companies might be an artifact of their genesis: 401k plans are designed to replace the "pension plans" of yore; as such, they are heavily regulated and each 401k is different. I've been told the legal documentation required for a 401k plan runs to the thousands of pages. Companies also want to manage the plans because, while supposedly cheaper to the company than pension plans, it still can affect their bottom line.

[Amezarak]

Just curious, why do you say they're supposedly cheaper than pensions? I don't have a lot of knowledge about how they're managed, but I can't imagine that much disparity in administrative fees.

And on the larger view, pensions represent a liability (I promise to pay Joe Sixpack 40% of his salary after ten years of service, some of which he will contribute to), while 401(k)s represent no liability at all. Work for the company 40 years and your 401(k) won't cover your retirement? Too bad. Should have contributed more or invested better; the company doesn't owe you anything. Or, for another example, if Joe lives to be 100 and he only planned for 76, that's a major problem with a 401(k), but a pension would still have to pay out, and it would be on the company's dime.

In addition, at least in my experience, company contributions to 401(k)s tend to be small and decreasing (for example, my company contributes a maximum of 3%, paid once a year) over time, and you have the additional complexity that vesting introduces, where (at least as I understand it), they can take it back if you quit roll your 401(k) over somewhere else.

So I'm not sure under what circumstances a 401(k) could ever not be cheaper. Are there some?

[refurb]

In addition, at least in my experience, company contributions to 401(k)s tend to be small and decreasing

Random change of subject, but did you ever wonder why some companies match 401(k) contributions? Or automatically give you a small contribution regardless if you decided to contribute yourself?

It's because 401(k) contributions for highly compensated employees (HCEs) are at risk of not getting the tax deferral unless the 401(k) plan meets a bunch of metrics including participation, etc.[1]

And you thought they were doing it out of the goodness of their hearts! ;)

[1] https://blog.personalcapital.com/retirement-planning/seeking...

[ForHackernews]

> 401k plans are designed to replace the "pension plans" of yore

That's actually not really true. The 401(k) was an obscure provision in the Revenue Act of 1978 and it wasn't until two years later that Ted Benna realized it could be used as a loophole to set up an employer-matched retirement plan: http://www.learnvest.com/knowledge-center/your-401k-when-it-... It wasn't designed to be used this way, and that's not what the IRS had in mind when they originally drafted the rules.

Companies love them because they're cheaper than a pension plan, and crucially, they transfer all the risk and responsibility onto individual employees and away from the company.

[spacehome]

Frankly, seeing in the 80s and 90s how pensions are counted as liabilities on the company's balance sheet and can be wiped away in an engineered bankruptcy, I'm quite happy transfer the risk away from the company.