18 11, 2019

Two rival experts agree — 401(k) plans haven’t helped you save enough for retirement

2019-11-18T11:28:35-08:00November 18th, 2019|Categories: 401(k)|Tags: , |

Retirement experts have debated for years over the consequences of America’s shift from traditional pensions to 401(k)s and other so-called defined contribution plans. Among the issues at hand: Do the new-style plans leave too many workers behind? Do they saddle employees with too much risk? Do they increase economic inequality? It’s fascinating, then, to see that two experts who commonly come at these questions from opposite sides of the political divide have collaborated on an important new analysis of [...]

21 08, 2019

NIRS: No money saved for 4 states that shifted to DC from DB plans

2019-08-21T08:17:37-07:00August 21st, 2019|Categories: 401(k), Defined Benefit Plans|Tags: , |

Four states that shifted to defined contribution from defined benefit plans did not save money, said new and updated case studies from the National Institute on Retirement Security. NIRS researchers updated prior case studies on Alaska, Michigan and West Virginia and created a new study on Kentucky. All of the states have switched new employees to defined contribution-only accounts to deal with pension underfunding and rising costs. According to an NIRS report on the studies, the changes increased overall [...]

30 10, 2017

Limiting 401(k) contributions is ‘an enormous budget gimmick’ says think tank

2017-10-30T18:02:36-07:00October 30th, 2017|Categories: 401(k)|Tags: |

When benefits adviser Ted Benna thought up a new type of employee savings plan in 1980, the client he created it for rejected the idea as too risky. After all, no one had previously used the unremarkable section of the tax code called 401(k) to defer paying taxes on money that rank-and-file workers set aside for retirement. So Benna decided to try it out at his own workplace, Johnson Cos., a small consulting firm outside Philadelphia. Without intending to, [...]

23 10, 2017

Republicans Consider Sharp Cut in 401(k) Contribution Limits

2017-10-23T15:47:12-07:00October 23rd, 2017|Categories: 401(k)|Tags: , |

House Republicans are considering a plan to sharply reduce the amount of income American workers can save in tax-deferred retirement accounts as part of a broad effort to rewrite the tax code, according to lobbyists, tax consultants and congressional Democrats. It is unclear if Republicans will ultimately include a cap on contributions in the tax bill that they are expected to release in the coming weeks. Such a move would almost certainly prompt a vocal backlash from middle-class workers [...]

14 10, 2017

Bad news: Your 401(k) won’t give you a decent retirement

2017-10-14T00:05:13-07:00October 14th, 2017|Categories: 401(k)|Tags: |

For nearly 40 years now, we’ve been hearing that 401(k) plans are the key to a comfortable retirement. By giving a tax break to workers contributing part of their paychecks to their retirement nest eggs, the plans were designed to supplement Social Security benefits and employer pensions. Instead, they’ve become substitutes, not supplements, for employer pensions and bulwarks against continuous attacks on Social Security benefits. A new survey from Boston College’s Center for Retirement Research demonstrates, however, that 401(k) plans are [...]

8 09, 2017

Are 401(k)s Contributing to the ‘Retirement Crisis’?

2017-09-08T18:01:59-07:00September 8th, 2017|Categories: 401(k)|Tags: |

We’ve been at this for almost 3 years — the DOL Fiduciary Rule. The Rule’s intent was to increase transparency in fees paid by consumers, decrease conflicts of interest caused by variable compensation and to put all investment advice under a uniform standard of care. Sadly, the department places the most cumbersome and difficult requirements on IRAs and independent investment and insurance advisors. […]

4 05, 2017

401(k) myths you can’t afford to believe

2017-05-04T21:14:22-07:00May 4th, 2017|Categories: 401(k)|Tags: |

Most of the positive PR about 401(k) plans is warranted: They’re convenient, as contributions are deducted directly from the worker’s paycheck. They enable savers to shield a substantial amount of money from taxation ($18,000 a year; or $24,000 if you’re 50 or older), and if an employer matches a portion of employee savings, it’s an easy way to score free money. But don’t believe everything you hear. Falsehoods — and even following fact-checked 401(k) rules of thumb in every [...]

22 02, 2017

How We Got Out of a 401(k) and into a Real Pension

2017-02-22T23:20:56-08:00February 22nd, 2017|Categories: 401(k)|Tags: |

After being trapped in an inferior 401(k)-style retirement plan, is it possible for a union to reverse the trend and switch back to a traditional defined-benefit pension? Connecticut state employees did just that in 2012. Our little-known story, combined with similar victories in Massachusetts and West Virginia, shows it can be done. There’s a small but growing movement to follow suit in other states. […]

7 02, 2017

Michigan leads effort to shift workers away from pensions

2017-02-07T19:26:05-08:00February 7th, 2017|Categories: 401(k)|Tags: |

Struggling under the weight of pension and health care obligations, Michigan lawmakers appear ready to take another whack at public employee benefits — a move that reflects renewed determination to shift workers to 401(k)-style retirement systems, even if it happens in baby steps. Other states have made more modest changes, but the latest push shows that conservatives want to approve big reforms 20 years after Michigan became the first state to close pensions to future state workers. Republican Gov. [...]

5 01, 2017

The Champions of the 401(k) Lament the Revolution They Started

2017-01-05T19:41:54-08:00January 5th, 2017|Categories: 401(k)|

Herbert Whitehouse was one of the first in the U.S. to suggest workers use a 401(k). His hope in 1981 was that the retirement-savings plan would supplement a company pension that guaranteed payouts for life. Thirty-five years later, the former Johnson & Johnson human-resources executive has misgivings about what he helped start. What Mr. Whitehouse and other proponents didn’t anticipate was that the tax-deferred savings tool would largely replace pensions as big employers looked for ways to cut expenses. Just 13% [...]

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