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COMMENTARY | Sometimes I feel as though my slothful 401(k) is a turtle racing my Roth IRA that is more like a fast rabbit.
I believe the reason my Roth IRA is in better shape is because I'm not limited by just a dozen or so funds. In fact, I can invest in just about anything through my Roth.
According to USA Today, Treasury Secretary Tim Geithner said American workers need choices for managing their savings for retirement.
A new Treasury Department proposal would require new 401(k) fee disclosures.
The proposal would also allow employees to put a portion of their retirement savings into an annuity. I'm not at all a fan of annuities, but I would appreciate having any new investment options.
I don't want to give a lump sump of my retirement money to an insurance company that will then pay me a (most likely a pitiful) amount for life. Instead of having an annuity, I'm comfortable managing my money in a retirement account. I am one of the many Gen-Xers who have taken part in what some call the "individual investor revolution."
I am hoping the Treasury plan would make an even more drastic and fundamental change to the 401(k) plan than what I've read about to date.
Why not allow employees to invest their own money in whatever they want? For example, when a person leaves a job, he or she is free to roll over a 401(k) into a self-directed IRA rollover account.
In this new account, they typically have access to bonds, mutual funds, individual stocks and other entire range of investments offered out there.
After toiling at my job for more than 10 years, I look at my 401(k) and wonder why it's not speeding along like my Roth IRA that I mange through a discount brokerage account. At first I suspected that it was because I have too few options within my 401(k) plan.
But after thinking about my asset allocations, I realized I also needed to shift out of bonds and into aggressive international and domestic stock funds since I'm not quite 40. After just one month, my 401(k) saw an 8 percent increase.
I know that the stock market is having a bit of a rally right now. But it still made me feel good that I'm benefiting by having more of my money in stocks.
I just wish I had even greater choices, but I'll have to wait until I can one day rollover my 401(k) into an IRA. That is, unless the 401(k) is revamped to be more friendly toward the do-it-yourself investor.
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