I stopped contributing to my 401K, tell me I am wrong...

[roravetz]

I would just make sure you open an IRA and start the auto contributions right away. Its easy to let it slip and the next thing you know you went a year without saving anything. I would also be sure look at some of the IRS tables because depending on your income and whether or not your spouse is covered by a retirement plan you may not be able to do pre tax deductible contributions (if that was your plan).

 

[mikieb]

There is another lengthy thread about 401k vs Ira. The reason I would say continue to contribute is because you can put more money in the 401k that Ira and it goes in tax free. But it is a complicated decision.

The match is horrible, but there is nothing you can do about that. Regarding the rest of the stuff, you and the other employees might be well served to talk to company management and tell them they need another provider. Both the employer and Nationwide have a fiduciary duty to manage the plan appropriately. There are a lot of plan providers out there that won’t charge you the fees it sounds like you are getting hit with. You may have to threaten a class action suit. Sort of the nuclear option though. In the case where the Nationwide plan holds Nationwide funds, you should not be double charged. I would think that not even Nationwide is dumb enough to do that. But Nationwide is currently being sued for mismanagement of its own plan so you never know.
https://www.plansponsor.com/lawsuit-accuses-nationwide-trying-profit-401k-investment/

You don't think Nationwide is dumb enough ? Well, no... they are smart enough to know that a mutual fund that holds their mutual funds can double stack the management fees....

Also, Nationwide covers auto insurance... a few years ago, they had an insured policy holder get hit by an uninsured motorist. Nationwide hired a lawyer to defend the uninsured motorist so they could reduce the amount that was to be paid to the insured policy holder.... So ya. Nationwide is that way...

 

[ida homer]

They covered it above, your employer kind of sucks.

Have you considered a change of jobs/companies?

Also, real estate. Nothing on the planet can garner the returns that real estate can, so diversify.

They make it sound so simple, “maximize your contributions and in 25 years you’ll have $1.5m.” Not necessarily. You need a GOOD advisor, you get what you pay for.

 

[SAJ-99]

You don't think Nationwide is dumb enough ? Well, no... they are smart enough to know that a mutual fund that holds their mutual funds can double stack the management fees....

Yeah, I get the economics of it from their end, but I just wanted to let you know that no one does that because it would be a breach of their fiduciary duty. They are practically begging for a lawsuit. Your company should have a consultant help them with their plan. My guess would be that the consultant would suggest a move away from Nationwide, for the reasons your research points out. Why your company uses Nationwide is the bigger question.

 

[Steiny]

Even with no match a 401k is typically a pretty decent place to put your money as it goes in pre-tax and you get all of the extra growth on all of your money vs post tax investments.
However, good research on your part. Sounds like it is being poorly managed with crummy results and a bunch of silly fees.

If you company won't change plan holders, you may be wise just do your own thing with a well managed IRA invested in some good mutual funds.
Another nice thing about the 401k is that it is "forced savings" as it is taken out every pay period before you get a chance to get your hands on it. It takes discipline to keep saving every pay period on your own and many are incapable.

 

[Irrelevant]

Yeah, I get the economics of it from their end, but I just wanted to let you know that no one does that because it would be a breach of their fiduciary duty. They are practically begging for a lawsuit. Your company should have a consultant help them with their plan. My guess would be that the consultant would suggest a move away from Nationwide, for the reasons your research points out. Why your company uses Nationwide is the bigger question.

Our company hires a consultant every year to help with retirement and health benefit negotiations and research. Even when we stay with a provider just knowing we're shopping around can get us better rates.

 

[VikingsGuy]

Also, real estate. Nothing on the planet can garner the returns that real estate can, so diversify.

Diversity is good. Real estate can be good or it can be a total mess. Lots of money made and lots of money lost in real estate markets. Definitely do your homework if that is the route you choose.

 

[406dn]

That is a horrible plan. Hard to make it any worse. A company that matches that poorly is SCREAMING that it doesn't care about their employees' futures. I doubt they are too interested in changing anything, given their miserly contribution into the plan.

I have been retired for a number of years. My employer matched 7 on 6 and also had a generous defined pension retirement plan. There really was no good reason why any employee there could not enjoy a secure retirement. Some have lost much of their nest egg for one reason or another.

I'm afraid that in the coming years it will become increasingly evident that solely a 401k plan from a company will not fund much of a retirement for most people.

 

[Jwill]

That's bad enough to make you think someone is on the take... Hope you can convince the company to trade up to a better plan administrator.

 

[SAJ-99]

Diversity is good. Real estate can be good or it can be a total mess. Lots of money made and lots of money lost in real estate markets. Definitely do your homework if that is the route you choose.

Finance joke is that your home is a liability masquerading as an asset. Lot of truth to it. To be honest, without the leverage, RE returns don't look too great. Falling rates for the last 40yrs also helps lower leverage cost. Even then, I wouldn't want to own a mall of any type. They probably all will become Amazon distribution centers (only half joking).

 

[VikingsGuy]

Finance joke is that your home is a liability masquerading as an asset. Lot of truth to it. To be honest, without the leverage, RE returns don't look too great. Falling rates for the last 40yrs also helps lower leverage cost. Even then, I wouldn't want to own a mall of any type. They probably all will become Amazon distribution centers (only half joking).

My concern is for naive investors who buy semi-blindly based on the, "they aren't making any more land" theory. Some land does go down, and some "investors" don't factor in transactional and ownership costs let alone opportunity costs. But the right piece of land, bought with the right tax strategy with the advantage of leverage is a money maker over time no doubt.

 

[homers]

Most people make the mistake of contributing to a traditional 401k or IRA. Most people would be far better off with a Roth 401k or IRA.

if you are going to use a financial planner, find a fee only planner.

just my opinion.

 

[VikingsGuy]

Most people make the mistake of contributing to a traditional 401k or IRA. Most people would be far better off with a Roth 401k or IRA

just my opinion.

Depends on a lot of present income and state residence, and retirement income and state residence, and future tax rates, and future market growth assumptions to actually calculate which is better. For certain scenarios, each is the best option, but fairly complicated calculation and even then a calculation built on a series of guesses.

 

[homers]

Depends on a lot of present income and state residence, and retirement income and state residence, and future tax rates, and future market growth assumptions to actually calculate which is better. For certain scenarios, each is the best option, but fairly complicated calculation and even then a calculation built on a series of guesses.

I don’t see it as that complicated. You get an initial tax break for a traditional,depends but 15-30%. So $1,500-3,000 for each $10k contributed. I think most people can get that back on investment return in a few years. With long term horizons of 10-35 years post that, 100% tax free.Way more tax free money than the initial tax break.

 

[longbow51]

My concern is for naive investors who buy semi-blindly based on the, "they aren't making any more land" theory. Some land does go down, and some "investors" don't factor in transactional and ownership costs let alone opportunity costs. But the right piece of land, bought with the right tax strategy with the advantage of leverage is a money maker over time no doubt.

OP, please heed this advice closely. I have seen more people lose money by buying land injudiciously than any other investment. And these were guys who could absorb the loss.

 

[VikingsGuy]

I don’t see it as that complicated. You get an initial tax break for a traditional,depends but 15-30%. So $1,500-3,000 for each $10k contributed. I think most people can get that back on investment return in a few years. With long term horizons of 10-35 years post that, 100% tax free.Way more tax free money than the initial tax break.

You have to account for (a) the compound growth of the pre-tax invested funds, which can be large depending on market performance and time; and (b) the fact that for many people their retirement income tax bracket will be lower than their future tax bracket. As you vary the assumptions I mentioned earlier, you see that there is a range of "best options".

 

[SAJ-99]

I don’t see it as that complicated. You get an initial tax break for a traditional,depends but 15-30%. So $1,500-3,000 for each $10k contributed. I think most people can get that back on investment return in a few years. With long term horizons of 10-35 years post that, 100% tax free.Way more tax free money than the initial tax break.

I think you described tax treatment on a Roth IRA. And if taxes are static over time, it’s a wash.

 

[wolfpup]

Just be careful about just opening an IRA before talking to your tax accountant. There are limitations on how much you can contribute if you are eligible for an employer plan. Lots of variables there such as plan types, income, etc. Talk to your CPA and make sure you don't contribute to a plan that you will have to take out anyway.

 

[Trial153]

Take it out, put in a low cost IRA. Then make your contributions right to the IRA

 

[wolfpup]

Take it out, put in a low cost IRA. Then make your contributions right to the IRA

Must be a rollover into the IRA. Direct rollover is best but can be done as long as you stay within the IRS rules to avoid a deemed distribution.