Does your 401k look more like a 201k?

Citibank window ad

I get it — the implication is that your 401(k) may be performing (approximately) half as well for you as it could. More accurately, the slogan should be, “Does your 401(k) growth fund look like it’s on a diet?” — well, something like that.

“401(k)” is the section of the Internal Revenue Code (IRC) that permits and regulates pre-tax employee contribution plans. There may be a section 201(k) of the code — I’m not going to bother looking it up — but it would have nothing to do with 401(k), let alone performing (approximately) half as well. In other words, the ad is a prime example of a non sequitur. I wonder if the person at Citibank who approved it realises how silly it really is.

Presumably, Citibank is not talking about your plan itself but about its administration and investment choices. I wonder who this ad is meant to appeal to — you, the powerless plan participant? Is the idea that you’re going to march into the office of the head of human resources and demand that they change the administrator and funds? Or is this ad geared toward the handful of human resources decision makers who might see it in the expectation that they’ll clap their hands to their foreheads in the sudden realization that, “My company’s plan is underperforming!” and rush to Citibank to find out how it could do better?

In the real world, what actually happens is that HR and an executive committee would track the performance of the administrator and funds, as well as determine the appropriateness of the plan’s provisions. If they’re poor or faltering, HR would research alternatives, probably based on the recommendations of people in their network, the size of the company, and the goals of the plan, then develop a request for proposal (RFP). They’ll choose the administrator that best aligns with their business goals, needs, and budget.

Be sure to remind your HR department that Citibank should be in the running. After all you wouldn’t want your 401k to look like a 201k. Whatever that is.