{"id":4595,"date":"2014-08-25T06:14:36","date_gmt":"2014-08-25T13:14:36","guid":{"rendered":"http:\/\/staging-prblog.paladinregistry.com\/blog\/?p=4595"},"modified":"2015-11-03T16:04:39","modified_gmt":"2015-11-04T00:04:39","slug":"retirement-plans-employment-separation","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/retirement\/retirement-plans-employment-separation\/","title":{"rendered":"Retirement Plans and Employment \u2013 The Separation"},"content":{"rendered":"

In my previous article, Why Retirement Plans Need to be Separated from Employment<\/a>,\u00a0\u00a0I suggested that Congress increase the IRA contribution limits to the same level of 401(k) limits.\u00a0 Ideally, it would be best if Congress increased the IRA contribution limits to the total defined contribution plan limits<\/a> so that individuals would be on a level playing field.<\/p>\n

Many large group retirement plan providers, however, will argue that individual investors are at a disadvantage compared to group retirement plan participants because these participants can buy mutual funds at a lower price than individual investors.\u00a0 This claim is dubious and dishonest<\/a> for multiple reasons.<\/p>\n

First, the amount of revenue sharing built into the cost of a mutual fund depends on the average participant account balance.\u00a0 Because smaller plans (which comprise the vast majority of total retirement plans) have lower average participant account balances, plan participants are forced to pay a greater percentage of revenue sharing which increases the likelihood that they could have purchased the same funds in an IRA at a lower cost.\u00a0 Second, the Vanguard Total Stock Market index fund<\/a>, for example, is available at the same price for individual investors and group retirement plan investors.\u00a0 Granted, this fund can be purchased at a lower price at a certain asset level, but this price break doesn\u2019t come into play for most retirement plans.\u00a0 While there is no revenue sharing built into this fund, there is often an asset charge added on which represents record keeping, administration, custodial, and advisory fees \u2013 fees that do not apply to individual investors (the advisory fees could apply, but at least individual investors have a choice).<\/p>\n

An honest assessment would be that sometimes mutual funds can be purchased at a lower cost in a group retirement plan depending on how the plan is set up (i.e. if the employer decides to pay for all or some of the costs), the size of the plan, and the mutual fund itself, as some mutual funds in a revenue sharing based plan pay no revenue sharing, thus, allowing participants to avoid the additional service fees.<\/p>\n

The problem is that every provider has some kind of agenda with the common goal being to increase participation in a system that is rigged against those who participate in it.\u00a0 Rather than striving for reform of the system, it would be better if people just walked away from it.<\/p>\n","protected":false},"excerpt":{"rendered":"

In my previous article, Why Retirement Plans Need to be Separated from Employment,\u00a0\u00a0I suggested that Congress increase the IRA contribution limits to the same level of 401(k) limits.\u00a0 Ideally, it would be best if Congress increased the IRA contribution limits to the total defined contribution plan limits so that individuals would be on a level playing field. Many large group retirement plan providers, however, will argue that individual investors are<\/p>\n","protected":false},"author":45,"featured_media":4599,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[117],"tags":[],"class_list":["post-4595","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retirement"],"yoast_head":"\nRetirement Plans and Employment \u2013 The Separation<\/title>\n<meta name=\"description\" content=\"Participants in group retirement plans do not have an advantage over individual investors as their plan providers, who have an agenda, want you to believe.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.paladinregistry.com\/blog\/retirement\/retirement-plans-employment-separation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Retirement Plans and Employment \u2013 The Separation\" \/>\n<meta property=\"og:description\" content=\"Participants in group retirement plans do not have an advantage over individual investors as their plan providers, who have an agenda, want you to believe.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.paladinregistry.com\/blog\/retirement\/retirement-plans-employment-separation\/\" \/>\n<meta property=\"og:site_name\" content=\"Paladin Registry Blog\" \/>\n<meta property=\"article:published_time\" content=\"2014-08-25T13:14:36+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2015-11-04T00:04:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2014\/08\/retirement-plans-and-employment.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"620\" \/>\n\t<meta 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