IBM to end 401(k) match, offering a hybrid plan | Hacker News Reader

IBM to end 401(k) match, offering a hybrid plan

cnbc.com

27 pointsUmofomia16 comments

The more the employer/employee relationship is comoditized, the more benefits need to be decoupled from the employee and the employer.

Health insurance is a bit complicated but stuff like 401k/hsa/ira etc should easily be decoupled since there are already solo 401ks etc. I should be able to dump 19.5k/3.8k at the beginning of each year and be done with it without doing the whole song and dance.

> I should be able to dump 19.5k/3.8k at the beginning of each year and be done with it without doing the whole song and dance.

You mean allocating your "what % of my paycheck (gross or net) goes into it" to 100% for the first few paychecks to get it to $19.5k?

That's not allowed by my plan/benefit manager due to reasons. I assume due to the eQUiTY based reasons for 401k clawbacks etc if not enough employees do it. I can only do max 15%.

even more reason for a solo 401k for everyone. Why should it matter for my 401k if kiki in hr doesn't contribute so mine needs to be clawed back?

> You mean allocating your "what % of my paycheck (gross or net) goes into it" to 100% for the first few paychecks to get it to $19.5k?

Also why does it need to be taken out of each paycheck. I can just fund it from cash Jan 1st each year.

At the end of the day, if the tax incentive is being used to get people to save, just let people save and claim the incentive. No need for a middleman (the employer).

Do 401(k)s have clawbacks? I had never heard of that before and googling around all I found was articles about the complexity of clawing back things like sign on bonuses if the employee had immediate access to the 401(k) plan and had deferred part of the sign on. It also wasn’t “impossible” to get the sign on back, just complex.

I also have never seen a company allowing day 1 401(k) access but maybe I’ve always worked at a shittier tier of companies

> 401(k) clawbacks, also known as a corrective distribution, occur when a company's 401(k) plan fails to meet certain regulatory requirements, such as nondiscrimination testing. These tests are designed to ensure that a 401(k) plan does not disproportionately benefit highly compensated employees (HCEs) over non-highly compensated employees (NHCEs).

Hense my use of the word "equity"

If the E in those acronyms meant “equity” then my bad for not knowing. I am not working in such hallowed halls that equity is handed out without having to go through three or four layers of making sure your betters get paid out before you get the chance to see a benefit.

Pretend you’re explaining like I’m five when it comes to the word “equity” mostly because I don’t see where you used it in your post that be quoted as “equity”

Well there are personal iras but they have much lower limits for equity reasons like you thought: https://www.morningstar.com/retirement/why-are-ira-limits-so...

Yeah i do the backdoor roth too.

Not calling you a lair, but that’s been all allowed at all of my past employers that I can remember. Sounds like an employer issue.

Its at quite a few companies, even the largest ones. I know Microsoft and Amazon has/had it. Microsoft limits you such that no more than, I believe, 40 - 60% of your paycheck can be redistributed to retirement accounts.

I believe Amazon does too, since they run into HCI/HCE issues all the time, famously having a low match.

Among a plethora of others. For me, this has been quite a few companies, not all of course, I don't backload mostly out of laziness using this strategy often, but its beneficial when jumping to companies with low matches partway through the year.

I think I have experienced this at past companies, including Amazon.

But the limit was very high. I recall setting the contribution to something like 80% or 90% and maxing out after a few paychecks.

But in general: I agree with you. Why should we only be allowed to do what my employer allows? As if them allowing me to contribute is some benefit they are bestowing upon me. Rather than them just being middle-men between me and tax law.

Any limitations on the %age of your paycheck to 401k is your employer. I’ve set my 401k contribution to 80% in the past.

With health insurance you could also just give individuals the tax breaks directly. It would really help fix the system and simplify the tax code.

It makes no sense for 401k nor health to be managed by an employer. Almost all companies just outsource it to a useless 3rd party 401k provider that skims money off the top and selects 5 mediocre investment choices where they get the biggest kickback.

We look down upon bribery in other countries as third world problems while enabling it at a much larger scale with foolish tax regulations like this. What if your 401k provider and company health insurance conglomerate instead each stopped you on the highway to work once a week and demanded their $10 cut?

That's basically how it works in Canada. You can even request that the tax relief is applied to each pay check rather than waiting for the tax refund.

Also don't forget the $43,500 post-tax 401k contribution that you can backdoor into to a Roth.

if your employer supports post-tax contributions

AIUI they bought a ton of treasury bonds and are using that as the backing of this transition and that's how they can promise the 6% return or whatever it is for the initial years.

Theoretically if the market tanks hard those 401ks will drop like a rock and the bonds won't so this could be a hedge to protect their employees but to the employees it probably looks really scary.

> Theoretically if the market tanks hard those 401ks will drop like a rock and the bonds won't

Most (all?) 401k plans allow you to invest in bonds.

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