The Inequity Trap: How 401(k)s Drive Earning Gaps Between Workers

By Andrew Clark Source: NPPC A new study from Vanguard outlines a predictable yet troubling reality: The vast majority of employer contributions to 401(k) plans benefit higher-income employees rather than their working-class counterparts. The study, conducted by economists from MIT, Yale, and the U.S. Census Bureau, found significant disparities in employer matches to 401(k) contributions among different demographics. Black and Hispanic workers, who typically earn lower wages compared to white workers, tend to contribute less to their 401(k) plans. [...]

2024-07-11T10:01:21-07:00June 28th, 2024|Categories: 401(k)|Tags: , |

Was the 401(k) a Mistake?

Source: The New York Times Jen Forbus turned 50 this year. She is in good health and says her life has only gotten better as she has grown older. Forbus resides in Lorain, Ohio, not far from Cleveland; she is single and has no children, but her parents and sisters are nearby. She works, remotely, as an editorial supervisor for an educational publishing company, a job that she loves. She is on track to pay off her mortgage in [...]

2024-05-09T09:54:35-07:00May 9th, 2024|Categories: 401(k)|Tags: |

Americans leave billions in workplace 401(k) plans. DOL wants to help find their lost money.

By Courtney Degen Source: Pensions & Investments Congress has tasked the Labor Department with building a lost-and-found database to help Americans find their lost retirement savings. It's off to a rocky start. The database — mandated by the retirement package SECURE 2.0 passed in late 2022 — will allow savers who lost track of their retirement money to locate their plan administrators, which experts agree is a complex problem in need of a solution. However, the DOL’s recent proposal [...]

2024-04-26T15:10:54-07:00April 26th, 2024|Categories: 401(k)|Tags: , , |

401(k) experiment has failed, fueled U.S. retirement crisis, labor economist says

By Rob Kozlowski Source: Pensions & Investments The 401(k) plan experiment has failed, and the retirement crisis in the United States is only getting worse, said Teresa Ghilarducci, labor economist and author of the forthcoming book "Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy." Ghilarducci, who is also professor of economics at The New School for Social Research and the director of the Schwartz Center for Economic Policy Analysis and The New School's Retirement Equity Lab, [...]

2024-01-23T13:53:46-08:00January 19th, 2024|Categories: 401(k)|Tags: , , |

Traditional pension plans are pretty rare. But here’s who still has them and how they work

By Jeanne Sahadi Source: CNN The phrase “pension benefits” may come up a lot in the next several days as negotiations between the United Auto Workers union and the Big Three automakers go down to the wire to avert a strike. But for most private-sector US workers, pensions disappeared long ago. In a traditional pension, employers contribute, invest and manage retirement funds for their workers, who then receive guaranteed monthly checks for life after they retire. But over the [...]

2023-09-27T11:03:51-07:00September 27th, 2023|Categories: 401(k)|Tags: , |

How different types of pension plans impact employee recruitment, retention

Source: Benefits Canada When Alaska switched its public education employees from two defined benefit pension plans to a 401(k)-style defined contribution plan, more staff left their positions, according to a new report by the National Institute on Retirement Security. The report benchmarks retirement benefit offerings among state-level plans in Alaska and nationwide, analyzing the evolution of public pension plans since the 2008/09 financial crisis. In 2005, the Alaska legislature voted to close its two statewide DB plans for teachers and [...]

2023-06-16T10:36:03-07:00June 13th, 2023|Categories: 401(k)|Tags: , |

DC Plan Sponsors Should Pay Attention to Increased Litigation, Low Retirement Confidence

By Remy Samuels Source: Plan Sponsor Increased litigation; regulatory and legislative changes; and a lack of retirement confidence among participants were common themes observed by defined contribution plan sponsor panelists on a recent Mercer webinar reflecting on key trends in the first quarter of 2023. Roughly 43 lawsuits, noted with activity, have been filed this quarter against retirement plans, including 14 settlements that totaled about $55.3 million, said Rhonda Berg, a senior principal and defined contribution consultant at Mercer [...]

2023-05-24T15:21:15-07:00May 24th, 2023|Categories: 401(k)|Tags: , |

Trump Loses His Clutch on Your 401(k) in Department of Labor Ruling

By Eric Reed Source: Yahoo! Finance The new rule is written broadly, which means that it may let employers explore several different categories of investing. But it specifically aims to create more opportunities for ESG, or "Environmental, Social and Governance," investing. Otherwise known as impact investing, these are portfolios that invest around specific social and political goals. For example, a portfolio may explicitly choose not to invest in fossil fuels and dirty industries, or it may proactively invest in [...]

2022-11-30T16:24:08-08:00November 30th, 2022|Categories: 401(k), ESG|Tags: , |

DC Plans: Cost Savings After All?

By John Iekel Source: American Society of Pension Professionals & Actuaries Defined contribution plans have outstripped defined benefit plans in number of accounts, assets, employers offering them and participants. But a recent study that examines the cost of both kinds of plans challenges the notion that bigger is synonymous with better. In “A Better Bang for the Buck 3.0: Post-Retirement Experience Drives Pension Cost Advantage,” National Institute for Retirement Security (NIRS) Executive Director Dan Doonan and Pension Trustee Advisors [...]

2022-01-25T10:59:49-08:00January 25th, 2022|Categories: 401(k)|Tags: |

Pension plans cheaper overall than 401(k)s, researchers find

By Emile Hallez Source: Investment News A pension research group has a message for employers: The switch from defined-benefit plans to 401(k)s has made retirement saving more expensive. That conclusion takes into account the costs borne by both employers and employees. Switching to a defined-contribution plan can of course save companies money, but the overall cost of the benefit increases, according to the National Institute on Retirement Security. The nonprofit this month published its third iteration of a paper [...]

2022-01-20T10:47:21-08:00January 20th, 2022|Categories: 401(k), Defined Benefit Plans|Tags: , |

Workers will soon find out how much guaranteed income their 401(k) could deliver in retirement

By Sarah O'Brien Source: CNBC It can be tricky figuring out how much income your retirement savings actually could deliver in your golden years. That may now become easier. As mandated in the 2019 Secure Act, 401(k) plan administrators will start providing illustrations on quarterly or annual statements showing an estimate of how much guaranteed lifetime income you could potentially get if the balance were annuitized. “The general intent here is to educate plan participants about how much their [...]

2021-11-05T16:48:56-07:00November 5th, 2021|Categories: 401(k)|Tags: , |

Plan Sponsors Want Guaranteed Lifetime Income Options

By Brian Anderson Source: 401K Specialist According to new research released today by Allianz Life, retirement plan sponsors “overwhelmingly” see the value of guaranteed lifetime income options—and are now ready to begin offering these new choices in their plans almost two years post-SECURE Act. According to the new data, plan sponsors indicated that they believe offering a guaranteed lifetime income option is a wise move that will go over well with plan participants. Of those surveyed, 87% of plan sponsors believe [...]

2021-10-13T10:09:30-07:00October 13th, 2021|Categories: 401(k)|Tags: , |

Why the 401k Fails and What A ‘Better’ System Looks Like, According to Teresa Ghilarduci

By John Sullivan Source: 401K Specialist  Teresa Ghilarducci once called the 401k an immature, underdeveloped child that needs help over a mudpuddle to the curb when crossing a street. While we disagree, we love the imagery. A labor economist and nationally recognized expert in retirement security with The New School for Social Research, Ghilarducci is a consistent and prolific advocate for a better system, however defined. Read the full article

2021-08-30T08:31:42-07:00August 30th, 2021|Categories: 401(k)|

40% of 401(k) participants say fees a mystery, GAO reports

By Brian Croce Source: Pensions & Investments Almost 40% of 401(k) plan participants do not fully understand the fees they are paying, a Government Accountability Office report released Thursday found. Moreover, 41% of participants incorrectly believe that they do not pay any 401(k) plan fees, according to the report. The Department of Labor requires plans to provide participants with fee disclosures, but GAO found that 45% of participants are not able to use the information in disclosures to determine [...]

2021-08-30T08:29:09-07:00August 30th, 2021|Categories: 401(k)|Tags: , |
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