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Joshua Itzoe on Fixing the 401(k)

Excerpt: In an odd coincidence, at the same time Wall Street has been imploding, laying bare valuation and other problems with investments in retirement plans and elsewhere, I happen to have been reading independent fiduciary/401(k) advisor Joshua Itzoe's book, Fixing the 401(k), which is premised on the idea that 401(k) plans are compromised by inherent, systemic problems, ranging from issues in plan design to the significant impact of fees charged against plan assets[.]

Fixing the 401(k) System for Small Companies

"[S]mall-company plans face a structural handicap, one which the invisible hand has not grasped. To be sure, some providers, Vanguard most notably, now offer significantly cheaper small-company plans. But most small 401(k)s remain pricey. In addition, cost improvements do not help those employees who work at the 50% of small firms that lack a plan. Two simple legislative changes would lead to great improvement."

How Fixing the Form 5500 Could Help Illuminate 401(k) Plans' Quality

"Here are three areas where the Form 5500 requirements are lacking key information: [1] Investment lineup information on the retirement plan disclosures are often incompatible with SEC filings, making it impossible to match information on the investments available within 401(k) plans to other data that the SEC collects.... [2] The Form 5500 also fails to require key data on popular investment types, such as collective investment trusts.... [3] Information on the administrative and investment fees participants pay is inaccurate and limited."

How to Fix the 401(k): Five Suggestions for Giving Workers a More-Secure Retirement

"Simplify fee disclosure.... Require plans to offer low-cost index funds.... Require plan features that nudge people to save more.... Have those providing guidance be fiduciaries.... Start a national 401(k) plan for small employers."

How to Fix the 401(k) Retirement System That Emerged by Accident

"Few people expect a return to traditional pensions so proposals tend to focus on making the current system work better. Here are some of the more interesting ideas and those gaining attention: Hybrid Plans ... Thrift Savings ... Avoiding Leaks ... Plan Disparity ... Fees Debate ... Reduce Balances."

It's Time to Fix the 401(k)

Excerpt: What would a better system look like? It would be universal and strike a more conservative balance of risk and return. Most of all, it would be designed for savers, not employers or money managers. Here are five principles for reform.

The 401(k) Defined Contribution Regime: A Pension System That Needs Fixing

"The private pension system in the US is in transition from defined benefit plans to defined contribution plans. On balance, this may be a step in the wrong direction.... The weakness that has generated the most attention is that employees have not been saving enough in their 401Ks to assure a comfortable retirement.... The post-retirement weaknesses in 401K-based plans have not generated nearly as much attention. Perhaps the most critical is the problem of managing mortality risk."

Will the Tenth Circuit Court of Appeals 'Fix' the Ongoing 401(k) SNAFU?

"A case is currently pending in the 10th Circuit Court of Appeals involves many of the same issues that were in Brotherston, specifically the 'apples and oranges' argument and the issue of whose has the burden of proving causation in 401(k) actions.... This case is a perfect example of how some courts are improperly confusing the two distinct stages of pleading and proof of causation." [Matney v. Barrick Gold of N. Am., Inc., No. 20-275 (D. Utah Apr. 21, 2022; recon. denied Jun. 21, 2022; on appeal to 10th Cir. No. 22-4045)]

How I'm Fixing Your 401(k)

"When you dig into the details and the relationships that outside vendors have with legacy 401(k) providers, it's clear that the industry has lost focus on the goal, which is to give employees the opportunity to save as much as possible for retirement. You start to notice all of the hands in the cookie jar: TPAs, fiduciaries, recordkeepers, fund managers, broker/dealers, sponsors, custodians, RIAs, and on and on.... When I was thinking about my goal, providing a successful retirement for my employees, I simply could not justify that fee situation when trying to account for value in each of those services in a retirement account."

Fidelity 401(k) Price-Fixing Scheme Cost Retirement Savers Plenty

"Anyone who believes that the marketplace for 401(k) plan services has been competitive over the past three decades or that there have not been widespread systemic abuses in the retirement savings industry, should study closely what Fidelity admits it did for four years from 2004 through 2008 -- until Forbes drew attention to the practice and Fidelity relented. By the way, it is likely that Fidelity was not alone in these practices and that they may continue at other 401(k) administrators."