[quote=harvey][quote=SK in CV]Umm….401K’s (and similar plans) are deferred comp plans too. Pretty simple. Lower unknowns, though not necessarily lower cost. Are they inherently doomed to failure too?[/quote]
There is nothing “deferred” about a 401K except the taxes. Money goes in the account each pay period and belongs to the employee. It is their money and even goes with them if they leave the employer.
Lower cost? Depends upon the manager, but there’s no reason a passively managed account should not be much cheaper, and actively managed funds should cost the same as CalPERS. If someone wants a more sophisticated investment product, like an annuity, that’s their choice and they bear the costs (not the employer/taxpayer.)
Lower unknowns? 401Ks have zero unknowns for the employer (or taxpayer) as the amount is paid in full with each paycheck. The unknowns for the employee are no different than any other investment.
I’ll answer your final, insincere question even though you know this: 401Ks are not doomed to failure like defined benefits because they don’t really have any unknowns distinct from other ordinary investments and – more importantly – any “failures” to meet a goal are isolated to individuals and not socialized to the general public.[/quote]
Nevermind. You don’t know what deferred compensation means.
This is what happens when people attack problems that they don’t understand.
