Salvaged from the filters, not sure why it was caught:
Subject: CD for 401k Investment? From: Tony Sivori
Is there any legal reason why FDIC insured Certificates of Deposits could not be offered as an investment option in a 401k?
No. I can buy brokered CDs in my IRA. Any 401(k) that has a brokerage option mat very well allow this.
Not that I'm aware of.
The issue here isn't so much a legal one as a logistical and financial one. CDs don't pay much, to you or the issuer. So it doesn't surprise me that its not available inside a 401k. After all, HOW is the investment company going to get paid if a CD is used inside a 401K?
Please don't take this to mean that there are NO 401Ks that offer them, there may well be - I've just never seen it.
Gene E. Utterback, EA, RFC, ABA
rescued from the filters:
From: T> From: Tony Sivori
Indeed, great advice. It looks like I will end up cutting my 401k contribution to the minimum required to get the company match, and invest the difference in an IRA with CDs as the investment vehicle.
-- Tony Sivori
rescued from the filters:
From: Tony Sivori
Gene E. Utterback, EA, ABA wrote:
(Sorry, I forgot to include this in my first reply)
I made plenty in 2008 by buying heavily when the market was down. I'm in my mid 50's and I don't want to push my luck.
The closest thing I have available is a "guaranteed interest account 2 year", which currently pays a whopping five one hundredths of one percent (0.05%). I think any CD would have a much better return, and be insured by the FDIC to boot.
The "guaranteed interest" account is guaranteed only by Principal, and of course my nightmare is that Principal (down rated about 6 months ago from AAA to AA by S&P) could one day be in the news in the manner of Bear Stearns, Enron, or many others.
-- Tony Sivori
rescued from the filters:
From: T>>From: Tony Sivori
Previously I had my money in the S&P 400, and despite the fact that Principal never shows any fees in any of my statements, I am confident that they made money by hosting my 401k.
Thanks, I am pursuing this with my company's 401k invest committee.
-- Tony Sivori
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