this post was submitted on 09 May 2024
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Pretty much all companies over a certain size support retirement plans, that's not really the issue. The issues are:
The reason the 401k is so complicated is because brokerages want to keep it that way. They literally get paid to "customize" a plan for the company, but what that really means is charge a ton for compliance paperwork nonsense and limit options. A lot of the crappier plans have super expensive funds and are almost worse than forgoing the tax break and just investing in a regular brokerage account.
Yeah, that's pretty much what I'm talking about. Extend the IRA (already exists) to allow employer contributions (like the HSA) and increase the limit to match 401k limits. Then eliminate the 401k, 403(b), and a handful of others to just use the IRA that employees already control. This does lose some features, such as loans, and I suppose those could be supported by IRA plans if wanted (ideally, loans against retirement plans wouldn't be allowed to prevent people from shooting themselves in the foot).
The big retirement firms are going to fight tooth and nail though, just like Turbo Tax fights against tax simplification. But that would get us 80% of the way to what Australia has. The last 20% is a minimum contribution, which I think isn't needed, and instead we should try using defaults (e.g. contribute 5% for new hires, 1% for existing hires minimum by default, and increase 1% per year until 10% or whatever). A lot of companies already have a matching program that works well, and it's honestly not worth fighting companies over what the minimum should be.