**** corporate America.

I'd ask if they can sign y'all up for the Jelly of the Month Club while they are at it.

I'm not aware of any option that allows you to contribute an unlimited amount of pretax money.

If it's deferred compensation make sure that your comany is financially solid, because IRCC the money is not yours like in your 401K. If they go bankrupt, you are an unsecured general creditor for that amount.

Also, when you leave the company, the deferred salary is paid out and immediately taxable. You cannot roll it into another financial vehicle, like an IRA, without paying taxes first.

ag0207 said:

---

So the company I work for is floating a change to our investing options. Currently we have a standard 401k with company match.

Moving forward they want to do away with the match and are purposing a change that would allow us to invest as many pretax dollars as we want (not to the 401k but to secondary retirement fund). They are touting this as a great change for "high earners" which will allow employees to reduce their taxable income.

Currently I max my 401k to get the full company match, fund a simple IRA, have a back door Roth, HSA, and brokerage account that I put surplus cash in.

Would it be beneficial to use this option with the match disappearing or should I do something else with my money? Currently our 401k is with fidelity and this new option will stay with fidelity. The fidelity investment options have many of the same index funds that I currently use in my brokerage account.

---

Frankly, this is BS. The deferred compensation is really for the top Execs that are pulling in millions. They're basically asking everyone to take a pay cut and finance them. If they have any scruples, they will continue the 401k match, open the option to do back door Roth, and pay for their own costs of the deferred comp plan.

Lastly, I don't think them introducing this deferred comp plan costs anywhere near what they pay in 401k match, so likely saves the company money.

Lots of bad advice in this thread by people who have no clue what they're talking about. Many plans like this are far superior to the standard employee plan. Some have decently high fixed returns. Some allow unlimited in service rollovers (hello mega backdoor).

This is a very common arrangement especially in a company where salary isn't evenly distributed or lower comps don't use the plan very heavily. If I don't advise on something similar weekly, it's every other week.

Talk to your financial advisor. They should understand this type of plan front to back and left to right, and can advise you on the best place for your dollars.

hypeiv said:

---

I think companies like these plans also because they don't actually have to fund them, just need to keep a ledger of what they owe you and hope they have the money when you come asking for it down the line.

---

That's not typically how they work at all.

Ag92NGranbury said:

---

Red Pear Realty said:

---

**** corporate America.

---

maybe before slamming corporate america you should look at how fast economic conditions are changing...

the invisible hand works... sometimes harder on some industries than others

---

The only reason I posted what I did was to maybe give some Ags the courage to know they don't have to put up with stuff like this. I'm one of the biggest believers and champions of the invisible hand that you'll ever meet, but that street goes two ways. When employers pull jelly of the month club stuff like this, you should call them out and push back against it. Don't let them take your 401k's like they took your grandparents pensions. When the 401k falls, the last domino left is your home, and that's already under attack (from folks like me).

And on the economics lesson…I actually prefer my current gig a lot better than when I was a Director at GloboCorp. I get to invest in my own deals instead of making other people rich, and I get to help a lot of good Ags buy and sell around Texas. You might be surprised what a lowly realtor might learn in the course of business. When myself and others called this current economic clown show last year or maybe further back, on this forum and others, some folks mocked us for it. All good.

Red Pear Realty said:

---

Ag92NGranbury said:

---

Red Pear Realty said:

---

**** corporate America.

---

maybe before slamming corporate america you should look at how fast economic conditions are changing...

the invisible hand works... sometimes harder on some industries than others

---

The only reason I posted what I did was to maybe give some Ags the courage to know they don't have to put up with stuff like this. I'm one of the biggest believers and champions of the invisible hand that you'll ever meet, but that street goes two ways. When employers pull jelly of the month club stuff like this, you should call them out and push back against it. Don't let them take your 401k's like they took your grandparents pensions. When the 401k falls, the last domino left is your home, and that's already under attack (from folks like me).

And on the economics lesson…I actually prefer my current gig a lot better than when I was a Director at GloboCorp. I get to invest in my own deals instead of making other people rich, and I get to help a lot of good Ags buy and sell around Texas. You might be surprised what a lowly realtor might learn in the course of business. When myself and others called this current economic clown show last year or maybe further back, on this forum and others, some folks mocked us for it. All good.

---

i had to close down a pension once of a company that i came into...

i took some heat for it, but the reality is that the pension act of 2006 along with the great recession changed the game for pensions. it became a HUGE albatross for the company... one that could eventually sink the company even though it had been doing the right things all along (fully funding every year, etc)...

most legislators don't realize the unintended consequences of such acts like the one in 2006... it probably did more to close down private pensions than any other piece of legislation.

companies have to compete for employees... so the notion that companies are doing things just to screw the employees is naive. there is usually a bigger reason behind the scenes... and remember... Christmas Vacation is just a movie

my economic forecasts have been spot on as well... both on here and twitter

mosdefn14 said:

---

Lots of bad advice in this thread by people who have no clue what they're talking about. Many plans like this are far superior to the standard employee plan. Some have decently high fixed returns. Some allow unlimited in service rollovers (hello mega backdoor).

This is a very common arrangement especially in a company where salary isn't evenly distributed or lower comps don't use the plan very heavily. If I don't advise on something similar weekly, it's every other week.

Talk to your financial advisor. They should understand this type of plan front to back and left to right, and can advise you on the best place for your dollars.

---

We know the company is removing match from the plan and that is 99% due to liquidity concerns. Then they are proposing a plan that would put your funds at risk due to liquidity of the company? Add to that the fact that the company is pitching this as a net positive. I'd say the advice to run away is good.

Companies add deferred comp plans or adjust 401ks for a number of reasons. One of the most prominent is lack of participation and/or testing issues. Those typically have zero to do with liquidity problems and mostly to do with there being lots of high earners in the company, and/or the plan being top heavy. The company can move to a deferred comp plan to avoid testing problems and still allow the high earners to get a lot of money into tax deferred space for the people that want to save for retirement.

Telling someone to run away from a company when you likely know less than 5% of the applicable info about a situation is an ultimate Texags Move.