Reply #78: Another note about "retirement accounts" of the poor [View All]

[DuctapeFatwa]

First of all, companies who employ low wage earners frequently have them as "independent contractors" to avoid having to pay benefits or set up these accounts for them.

Second, most companies have a clause that the employee is not "vested," meaning able to actually have any of the company match for a period of years. Let's say your company "vests" you after five years.

Shortly before your fifth anniversary, there is a very good chance that you will be terminated from your employment. You have the right to "roll over" the contributions YOU put in, which are not going to amount to enough for a down payment if you have been putting in only the minimum required.

It is more profitable for the company to set up a new account for your replacement and train him for your low-level job than to match your fifty cents or whatever minimum withdrawal the plan requires.