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39 Yale L. & Pol'y Rev. Inter Alia 1 (2021)

handle is hein.journals/interal39 and id is 1 raw text is: YALE LAW & POLICY REVIEW Retiring the 401(K): A New Framework for Retirement Savings Benjamin Silver & Michael Slomovics* Americans attempting to save for retirement face a maze of account options, each with their own unique tax consequences. Unfortunately, this maze also limits access to tax-advantaged retirement savings and takes money out of savers' pockets. In this article, we recommend entirely eliminating traditional and Roth 401(k) accounts after a date to be specified by Congress. To compensate for dollars that workers formerly contributed to these accounts, we propose raising the current contribution limits to traditional and Roth Individual Retirement Accounts (IRAs) proportionately. We argue that this reform would solve numerous inefficiencies and inequities in the current 401(k) system, would effectively expand lower- and middle-class workers' access to tax-advantaged retirement savings, and solve seven severe problems plaguing the 401(k). In addition, we explore the options for transition ing from the current regime to an all-IRA regime and address some preliminary objections to our proposal. INTRODUCTION ............................................................................................................................ 2 I. How Do TAX-ADVANTAGED RETIREMENT SAVINGS ACCOUNTS WORK?....... 3 II. THE 401(K)'S MANY PROBLEMS-AND THE IRA SOLUTION....................................5 A . Lack of A ccess ...................................................................................................... 6 B. W aiting Periods and Entry Dates............................................................... 7 C. Lim ited Investm ent Options ........................................................................ 8 D . H ig h F ees ................................................................................................................... 9 E. Retirem ent Savings Leakage ............................................................................11 F. Lawsuits and High Employer Costs................................................................13 G. Inconsistent and Complex Regulatory Regime..........................................14 * Yale Law School, J.D. 2021. 1