401(k) plans allow employees to invest automatically and directly into managed funds--some not so good, but many are very excellent, and a good way for millions to save large nest eggs rather conveniently.
Your brother, by damning the 401(k), is trying to send business to someone like himself. How self-serving.
Don't get me wrong, I know full well that there are operating costs to running 401(k) plans, and I know that employees who participate in such plans pay for them indirectly. In a large pool, the costs are usually very low, so the employee typically has a lot working for him.
I'm not dogging "SEC licensed investment brokers," but your brother is wrong to criticize the 401(k) as a "poisonous" tool. By the way, there are 401(k) plans that offer a Roth version, too. It's a pay me now, or pay me later decision.
+1
Just to be clear, my brother’s advise was that if your employer matches funds, you DEFINITELY want to get as high as you can to get all the matching funds you can. He was very up front about it.
And back when he and I used to talk about this, most of the people I knew either worked for companies that didn’t have matching funds, or had not been at the company long enough to qualify for matching funds. I think I gave the impression that he thought 401k’s were bad.
I was trying to be too brief in my first post. It is partly because my company where I had my 401k did not match any of it.
To summarize:
401k’s are a good thing if the company matches your contribution.
They are a poor choice if the company doesn’t, unless they are your only option to sock away a LOT of fairly risk free savings.
Of course, if they make the limit 2400, never mind regarding the latter.