Comments on: What Are Your Thoughts On These Proposed 401(k) Changes?

By: Mike

Mike — Thu, 04 Mar 2010 04:45:04 +0000

the change i would like to se the ability to withdraw money after the age of 59 1/2 even with the restrictive 401 K plan that only alows withdral for buying a house, fixing or prevent forcluser, medical, educational, or death

as i am over 63 and still working i can not withdral money to get ready for retirement but if i am still working after 70 1/2 i have to take money out I WANT my money now

By: Brendan

Brendan — Mon, 08 Feb 2010 22:20:56 +0000

Annuities are quite common in Pension schemes in Ireland and the UK. In Ireland it was till recently (about 10 years or so ago) you took some as a tax free lump sum and the rest was paid out to you in an annuity.

The opt out issue mentioned by another comentor is also quite useful, this has got many people in New Zealand into a pension fund for the first time.

By: Tim

Tim — Sun, 07 Feb 2010 00:48:13 +0000

The difficulty I have with all this focus on 401K stuff is that those barking the loudest seem to forget investing is inherently a risk. In the backdrop of the current economic downturn, everyone seems to want a guaranteed, risk free investment that we do not have to know anything about.

I do agree, though, that fees and any relationships or affiliations should be pointed out.

I think that the govt has a great deal to do with how people perceive the 401K since it was billed as this great, probably secure way of securing your retirement. People believed what the govt said about 401Ks and committed money without thinking about the investment, costs, etc. I think people now are more aware, but the fact people are crying about being duped or losing money in their 401K’s to me indicates they were being stupid to think that the 401K was a guaranteed way to secure retirement.

By: pharmboy

pharmboy — Fri, 05 Feb 2010 05:53:09 +0000

I’ll admit there are things about my company’s 401k plan that I’m not happy about. Here’s a refreshing, why don’t we scrap 401ks and allow American’s to deduct up to 16,000 (or whatever the current limit is) from the fed income tax and let the market work out the details. My wife buys the exact same mutual fund through her 401k as we do on the open market for our Roth and her fees via 401k are more than double.

By: Jade

Jade — Thu, 04 Feb 2010 17:33:34 +0000

While all of the ideas have a positive face value, I am with Ctreit; Who is going to provide all of this education?

When it comes to investing and retirement, the worker has to take responsibility for their money and future. I have found the same operator who can tell me where to find a $5 coupon off an oil change at a certain website is the same operator who doesn’t know if they are contributing to their 401K.

This is another litany of rules which are nearly impossible to enforce and remove responsibility from the investor.

Companies should implement opt out systems and ensure they offer a low cost index fund which covers the major investment catagories. They should also offer a yearly voluntary information session. After that, employees have to take responsibility for their own large sums of money.

By: TJM

TJM — Wed, 03 Feb 2010 04:21:38 +0000

I agree with you that annuities are a bad idea for a plethora of reasons. Namely, what makes anyone think that the annuity providers will be in business if we suffer through another melt down? The biggest annuity players were the same companies that were staring into the abyss one year ago. 401k’s are flawed in that your investment options are limited. Why not treat 401k’s like an IRA and let workers invest in what ever they want?

By: Chaz

Chaz — Wed, 03 Feb 2010 00:25:51 +0000

I always wonder with annuities – will the company (or governmental unit, for that matter) making the payout still be in business in thirty years?

By: Sam

Sam — Tue, 02 Feb 2010 19:15:50 +0000

I don’t see any big problems with the proposals in the bullet points. It looks like requiring disclosure of costs and risks of the various funds in a 401k.

I can see that certain financial sales persons or fund companies would rather you didn’t know what a big slice of your returns are going to them. Or that a particular fund company was chosen as the 401k provider more for the kickback they gave to the benefits manager or CEO than the low cost and quality of the funds for the employees.

As for annuities, the TSP (401k program for Fed employees) offers an annuity as one way to withdraw funds. It doesn’t interest me, but for a single person with no children, it might be the best way to go. Maybe someone ccould sway an uneducated person with scare tactics into buying an annuity. But that same person is the one that will squeal the loudest when their S&P 500 index fund drops in value. Some people value security and stability more than returns. I say, if that is what they want, then that is what they should get.

By: Chris

Chris — Tue, 02 Feb 2010 18:26:55 +0000

“Require plan administrators to offer at least one low-cost index fund in order to receive protection against liability for participants’ investment losses.”

Since when are losses anything but your own?

By: Courtney

Courtney — Tue, 02 Feb 2010 16:42:50 +0000

Missing one major thing: opt-OUT of 401K instead of opt-IN.

Choice is still there, but let’s face it – people are lazy. 401K participation more than doubles for companies who have moved to an opt-out system.