GM to move all salaried workers to 401K plans

[Sgent]

47. That's the way 401-k's work

Multiple, flexible investment options... check
Sole benefit of the employee's... check

The real problem historically has been that HR departments didn't always look out for the best interests of their employee, or didn't have the size to demand the best options -- whereas the federal system does. Items such as free administration of the plan, or other incentives tended to cloud their judgement.

Some 401(k) and 403(b) plans had absolutely terrible investment choices -- variable annuities inside a tax advantaged plan, funds that charged 2% / year management fees or had loads, etc. Some were excellent, and most were in between. That being said, I had a 401(k) plan 15 years ago that allowed investments a large number of very high quality mutual funds at institutional prices, bank CD's, fixed income investments, etc.

There have been some recent changes in regulations which should go a long way to helping. In addition, HR is now on the line for providing reasonable investment choices.

Also, HR now has the ability to provide limited investment advice (previously they were essentially prohibited), which should give better balance to the information than having the stock broker try to setup your plan.