Comments on: Canadian RRSP Vs. U.S. 401(k) Retirement Account Comparison

By: TexaCan

TexaCan — Mon, 23 Mar 2009 22:32:12 +0000

Another great post. (I started with the TFSA vs RothIRA article.) Great comments too! I just want to take a different take on why the US 401k is structured as it is. I think it is more to discourage investment than to keep people from withdrawing for “silly reasons”. I would posit that for the last 30 years, the US has become more protecitve of Employers, with lesser regard for Employees. (a la “Reaganomics”) In the US, employee benefits, including retirement savings (401k) and affordable medical insurance are tied to the employer. These are “silver hand-cuffs”, if you will. So long as you are employed and stay with the same employer, things are straight forward. However, when you change employers, or lose your job, you must change (or lose) medical insurance plans and you should “roll-over” your retirement accounts to a new retirment account (Non-Roth IRA, or a new employer’s 401k). Of course, roll-overs may be subject to additional fees. If you opt to keep the 401k account with the original employer, you are not allowed to make further contributions or perform any investment actions such as investment re-distribution. The bottom line is that the 401k is designed to make changing employers less “convenient” and early withdrawls are hit with stiff penalities. The main attraction of the 401k plan is that many employers will supplement contributions to the account by matching a portion of employee contributions or contribute a minimum amount. As pointed out above, this is a great benefit. But, it is not mandatory and contribution plans are not consistent between employers. As well, employee participation is not manditory as was the case with company pensions. In short, the employee (a.k.a. investor!) -oriented Canadian RRSP is a much simpler account. Coupled with employer matching, the RRSP is a superior account. Now that the “Roth-like” TFSA has been created, I am one expat who may yet move back!

By: Digging Out of Dirt and Debt | Steve Rhode

Digging Out of Dirt and Debt | Steve Rhode — Mon, 11 Aug 2008 16:35:13 +0000

[...] Canadian RRSP Vs. U.S. 401(k) Retirement Account Comparison A great breakdown to find out how retirement planning works across the border. [...]

By: Valuable Links For Your Life-Aug 10-08 | Value For Your Life

Valuable Links For Your Life-Aug 10-08 | Value For Your Life — Sun, 10 Aug 2008 21:13:39 +0000

[...] Quest For Four Pillars finally clears up a big American mystery for me in Canadian RRSP vs. U.S. 401 (k) Retirement Account Comparison. I’ve always wondered exactly what this 401 (k) means to my friends down South, and now I [...]

By: Weekly Link Roundup | Counting My Pennies

Weekly Link Roundup | Counting My Pennies — Sat, 09 Aug 2008 12:04:10 +0000

[...] Canadian RRSP vs. US 401(k) [...]

By: Digging Out of Dirt and Debt

Digging Out of Dirt and Debt — Wed, 06 Aug 2008 13:32:21 +0000

[...] Canadian RRSP Vs. U.S. 401(k) Retirement Account Comparison A great breakdown to find out how retirement planning works across the border. [...]

By: Canadian TFSA Vs American Roth Ira

Canadian TFSA Vs American Roth Ira — Wed, 06 Aug 2008 09:01:22 +0000

[...] Canadian investment accounts. This post deals with the Canadian TFSA and the American Roth IRA. In part one I looked at retirement accounts – the Canadian RRSP and the American 401(k) . Part 2 compared [...]

By: My Dollar Plan

My Dollar Plan — Mon, 04 Aug 2008 16:44:47 +0000

I love the way the series turned out. Great job Mike!

By: Carnival of Personal Finance #164 : Carnival of Personal Finance

Carnival of Personal Finance #164 : Carnival of Personal Finance — Mon, 04 Aug 2008 13:28:57 +0000

[...] Canadian RRSP Vs. U.S. 401(k) Retirement Account Comparison [...]

By: squawkfox » Carnival of Personal Finance: City Slickers Edition

squawkfox » Carnival of Personal Finance: City Slickers Edition — Mon, 04 Aug 2008 11:15:35 +0000

[...] Quest For Four Pillars bridges the gap and brings North America together in Comparison between American 401(k) and Canadian RRSP Accounts. [...]

By: Personal Finance Reading Sunday Prepare for the Unexpected Edition | Personal Finance Blog by Money Ning

Sun, 03 Aug 2008 15:31:52 +0000

[...] Four Pillars does a comparison about Canada’s RRSP vs United State’s 401k Retirement Plans. [...]