Survey Says Households Stick With 401(k)s By Sarah N Lynch WASHINGTON—Despite the turmoil during the financial crisis, 401(k) plans are still performing well and American investors didn't exhibit many signs of panic during the greatest economic downturn in decades, mutual-fund industry leaders said Friday. On the contrary, balances today in defined-contribution plans have recovered, fewer investors than expected withdrew funds during the crisis, and a majority of investors still have confidence in their 401(k) plans, industry research suggests. "Savers are sticking with a 401(k) plan," said John Brennan, the chairman emeritus at Vanguard, who said stories in the media portraying the behavior of 401(k) investors during the crisis were inaccurate. "There has been no panic in defined-contribution investors." Ready the entire article here |
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Plan Sponsors, Participants Remain Committed to 401(k) Plans By Stephen Miller New data shows a clear correlation between employer matches for 401(k) plans and employee participation rates. The Impact of Economic Conditions on 401(k) and Profit Sharing Plans survey from the Profit Sharing/401k Council of America (PSCA), which looked at the 2008-2009 experience of 508 plan sponsors, found that: • 72.9 percent of U.S. companies that suspended their match in 2008 and 2009 experienced a decrease in plan participation vs. only 14.4 percent of those companies that maintained matching contributions. • Additionally, 17.9 percent of companies that did not change their match experienced an increase in plan participation. A significant portion of companies that experienced an increase in participation, as well as those that maintained participation levels, said that it was a result of automatic enrollment. Despite the tumultuous economic times, new hires who were enrolled automatically did not opt out at higher rates than they had previously. Read the entire article here |
Will 2010 bring 401k reform?More than a year after the stock market meltdown, a big rally has soothed the pain and slowed the push to overhaul the retirement system. So what's next for our nest eggs? When the stock market hit its all-time high in October 2007, few investors questioned the merits of their 401k plans. Two years later, their feelings are different. As investors continue to nurse the wounds of losing more than a third of their retirement savings, many wonder whether there's a fundamental flaw in 401k plans. Should the system be scrapped and replaced with something without all the risk? While the once-loud calls for change have quieted a bit as the stock market has soared about 60% since March, legions of investors remain anxious that their 401k's might let them down again. There are several ideas floating around Congress that include increased disclosure of fees in mutual funds and new regulations about 401k investment advice. Michael Townsend, as the vice president of legislative and regulatory affairs for Charles Schwab, analyzes government proposals to determine how they might affect individual investors. He offers insight into what's under consideration. Read the entire article here |
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By Money Management Executive Eighty-four percent of workers who are automatically enrolled in a 401(k) plan stick with the plan, up from 77% in 2007, Charles Schwab found. Participation among all plans rose to 77%, up from 73% in 2007.
“The good news is that most employees are sticking with their 401(k) plan, which continues to be one of the best vehicles to save for retirement,” said Catherine Golladay, vice president of 401(k) participant education and advice at Schwab. “The even better news is that people are also contributing to their accounts at almost the same level as they were prior to the market downturn. In fact, the average contribution rate in our plans stayed around 7% from 2007 to 2008, which is a reflection of people getting more serious about saving.” |
IRS will keep 401(k) contribution limits steady for next yearBy Sara Hansard - October 15, 2009 Contribution limits for 401(k) plans will remain unchanged next year, the Internal Revenue Service announced today.
Leaving the limits at this year's levels means that 401(k) participants under the age of 50 could contribute a maximum of $16,500; participants aged 50 and above would be able to contribute $22,000.
The announcement quieted concerns voiced in the retirement industry earlier this year that contribution limits to 401(k) plans would actually be lowered next year. Read the entire article here |
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