Foo Bar and Grill

A confession: I love the idea of 401K plans. But the implementation, for employer 401K's, is typically abominable, particularly for plans available at smaller companies (where I've spent my career). On the other hand, the self employment 401K is wonderful: it's a standard brokerage account that makes available everything supported by a normal brokerage account: stocks, mutual funds, ETFs, even things like CDs and directly purchased T-bills.

My idea for a radical revolution of the 401K is to abolish the employer account strategy, and have a 401K be a special account like an IRA that is managed by the employee. At a high level, the idea is that you open it, at your brokerage, give your employer a direct deposit number, and your 401K gets funded - just like direct deposit to a bank account.

Things like vesting schedules and such for employer match could probably be worked out by some sort of "vesting account" that is parallel to your main account, and which would move funds (or equivalent stocks, etc) to your main account once the funds vest, and that would revert unvested funds back to the employer when you quit. There are lots of issues with the vesting, but they could be worked out.

This would probably be much cheaper than the existing setup, especially for smaller companies that can't afford - or won't pay for - good 401K plans and end up providing employees with the "four expensive, underperforming garbage funds + money market" that I usually end up being stuck with.