How Big a Slice of Your 401k Pie Does Wall Street Get?
EmailABC's Z. Byron Wolf reports: If your 401k is a pie, how big a slice does Wall Street take over the course of your career? Do you have a right to know? Reps. George Miller, D-Calif, and Robert Andrews, D-NJ, are making the pie point literally and walking a cart full of fruit pies across the Capitol today, each with a piece missing. They (or at least their interns) will deliver the baked goods to members of the Senate Finance Committee, which deleted from a Senate bill of a provision that would require more disclosure from retirement plan managers about fees charged to plan participants. The House passed a provision as part of its version of the bill that would force 401k managers to disclose what fees they charge participants. The information about 401k fees is not easily assembled currently. A recent Department of Labor study guessed that an extra 1 percent in fees can add up over time in terms of lost compound interest, and cost a worker 28 percent of the value of their plan over the span of their career. We’ve got video of Sens. George Miller, D-Calif, and Rob Andrews, D-NJ, standing in front of the table full of pies and Miller trying to put one cut piece back in. There was plenty of witty talk at the press conference about the pies. “The Senate will be giving Wall Street the pie and telling the people to eat cake,” said Karen Friedman of a group called the Pension Rights Center. Andrews said he wants to “make sure the American family has the whole pie.”
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There are some rather significant issues with 401K plans.
Posted by: Rick McDaniel | June 16, 2010, 5:28 pm 5:28 pm
You don’t mention the fact 401k’s make average people play against the pros. Make the Wall Streeters gamble their money against professional pool players. Add in the insider info and other unethical deals like selling short; the average guy is getting ripped while Wall Street gets richer. When people that do productive jobs because they realize they are just economic slaves to a greedy machine then things will really get bad. Guys like you that write such lightweight material will be in trouble.
Posted by: Greg Reid | June 16, 2010, 6:24 pm 6:24 pm
A giant ponzi scheme, where only Wall Street execs win…Reagan pushed 401ks and helped kill traditional pensions for a reason. Ask any government employee, including our politicians and military people if they’d like to give up their pension and invest their own money in this legalized gambling arena known as Wall Street…they’ll laugh at you!
Posted by: Hege1321 | June 16, 2010, 6:35 pm 6:35 pm
We’re in a near Depression, but Wall St. is doing GREAT! Record bonuses! With YOUR MONEY. Too bad they didn’t leave any for YOU! But then why would they steal it, just to give it back?
Posted by: CBA | June 16, 2010, 6:41 pm 6:41 pm
Aside from the idiot pie image, more disclosure of fees and other charges is not a bad idea. Just make them understandable to the average American.
Posted by: j011254 | June 16, 2010, 6:53 pm 6:53 pm
I played around with some Excel spreadsheets I set up and found that it was about as expensive for me to set up a regular mutual fund account at a well-respected firm (like TR Price, Vanguard, etc.) that charges 0.1% (index fund ) to 0.9% (managed fund) in fees and pay taxes on the income and investment returns up front than it was to invest in a 401k with the large fees in the riskier, less-accomplished fund firm that was available to me through my employer and then pay taxes on the proceeds. I also knew exactly how much, beyond taxes I had and the money was available as I wanted it. Of course, setting up and maxing out my own Roth IRA the same way was a no-brainer.
Posted by: The_Mick | June 16, 2010, 8:08 pm 8:08 pm
Just wait until Uncle Sam makes you buy government bonds with your 401k and IRAs when China stops buying them !
Posted by: Matt | June 16, 2010, 9:08 pm 9:08 pm
Fly into retirement on wings of wax. Icarus accounts is what they should call them. The moment the congress says it is about to make wall street accountable. Wall street will tank.
Wall street = economic cannibalism
Posted by: rightbehind | June 16, 2010, 10:01 pm 10:01 pm
“How Big a Slice of Your 401k Pie Does Wall Street Get?” – They get precisely squat, not a penny for the thieves on wall street working in collusion with the criminals gang D.C. That’s because I cashed in my 401k back in 2007 before the market crash and bought physical silver and gold. That’s the only real way to build savings without having it stolen through taxes or deliberate inflation. I will not contribute one more penny to 401ks and neither should anyone else. Wise up America – 401ks = just another scheme that will be used by the Federal Reserve and the Treasury to steal your savings to prop up the TBTF.
Posted by: EndTheFed | June 17, 2010, 12:24 am 12:24 am
A bigger question is that of the remaining pie, how much does Washington eat?
Posted by: wantingbalance | June 17, 2010, 7:56 am 7:56 am
Remember, you have a choice as to what you invest in within your 401k. Nobody manages money for free. Large accounts are linked for Rights of Accumulation, which reduces the sales charge paid to firms. I’d like to see the contribution limits increase on these and Roth IRA’s.
Posted by: Gerald | June 17, 2010, 9:50 am 9:50 am