Archive for July, 2012

Target Date Funds in Retirement Plans

The CNN Money website has an article entitled “3 Things to Know About Target-date Funds” by Pat Regnier on their website.  Located at http://money.cnn.com/2012/07/31/retirement/target-date-fund-risks.moneymag/index.htm, the article discusses some of the risks and costs of investing in target date funds in 401(k) Plans.

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July 31, 2012 at 7:50 pm Leave a comment

Determining Retirement Plan Costs

The International Foundation of Employee Benefit Plans has an article by Lowell Sun entitled “Tough To Tell How Much 401(k) Plans Really Cost” on their website.  Located at http://www6.lexisnexis.com/publisher/EndUser?Action=UserDisplayFullDocument&orgId=2778&topicId=100023899&docId=l:1715608964&start=1&topics=single, the article discusses the upcoming fee disclosures.  As noted by the author, it is particularly difficult with revenue sharing to determine actual costs.  He also mentions abusive compensation arrangements that encourage higher cost investments.  I agree with the author that the disclosures will help with greater transparency, but it will not cover all costs that Plan Sponsors should be concerned about.

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July 30, 2012 at 6:21 pm Leave a comment

Trading 401(k) Investments

The Wall Street Journal has an article entitled “Stupid Investing Tricks” regarding investment behavior of 401(k) participants by Jason Zweig.  Located at http://blogs.wsj.com/totalreturn/2012/07/24/stupid-investing-tricks/?KEYWORDS=401%28k%29,the article discusses how participants often make decisions regarding changing investments based on recent performance rather than more long-term performance.  The author even notes that some of the participants in the study were influenced just by the poor performance on the day they placed the trade.  The question is whether greater awareness of this propensity on the participant’s part may help encourage them to be more willing to take a longer view when holding investments.

Thanks for reading and have a wonderful day!   Please be sure to subscribe to my blog and follow me on twitter @ChristineGurney.

July 27, 2012 at 10:38 am Leave a comment

Reviewing Your 401(k) Investments

With the upcoming fee disclosures, participants may be preparing to take a closer look at their 401(k) plans.   Foxnews has a video on their website entitled “Improve Your 401(k)”.  Located at http://video.foxnews.com/v/1751726256001/improve-your-401k/, the video is primarily investment focused, and it does bring up some nice basics to check.  I would add that I recommend for novice participants checking their funds on the morningstar website located at www.morningstar.com.  In order to use their website, a person does not need the premium product to be able to pull up morningstar ratings, expense ratios and other basic information.

Thanks for reading and have a wonderful day!   Please be sure to subscribe to my blog and follow me on twitter @ChristineGurney.

July 26, 2012 at 11:51 am 2 comments

Day Trading Trend with Retirement Funds

Walter Hamilton from the Los Angeles Times wrote an article entitled “Anxious Investors Day Trading with Retirement Accounts”. Located at http://www.latimes.com/business/la-fi-retirement-trading-20120709,0,3001025,full.story, the article reports about the trend among participants to participate in day trading with their retirement accounts.  Certainly, not a plan I would recommend, but I suspect the situation illustrates a growing impatience among the public for economic recovery.  Personally, I would rather try to find a way to up my contributions, if possible.

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July 25, 2012 at 1:16 pm Leave a comment

Retirement Plan Participants’ Loan Defaults

Last week, the Chicago Tribune had an article by Walter Hamilton titled “Defaults on 401(k) Loans Reach $37 Billion a Year”. Located at http://www.chicagotribune.com/business/breaking/chi-401k-loan-defaults-jul17,0,7104613.story, the article discusses the large number of loan defaults in 401(k) plans.  The article also mentions the tax consequences of a loan default. Very few participants probably obtain loans with the intention of defaulting on their loans, but the article is a good reminder of the ramifications of being unable to repay those loans.  In addition, the participant has reduced funds set aside for retirement. Especially for older participants, retirement may be postponed due to the loss of compounded earnings and the resulting shorter time in which to make up the defaulted funds that were not repaid.

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July 24, 2012 at 11:49 am Leave a comment

Unemployed Workers Using Retirement Funds

Last Wednesday, USA Today ran in their Money Section an article by Christine Dugas called “35% of Displaced Workers Raid Retirement Funds to Get By”. Located at http://www.usatoday.com/MONEY/usaedition/2012-07-18-401k-withdrawals–under-embarg_ST_U.htm, the article points out that the reality that participants often dip into retirement savings and default on plan loans after terminating employment.  On the surface, the bad economy would make this seem understandable.  Given many years in the industry, this often occurs regardless of the current economic climate.  The choice is the participant’s, but the participant should also weigh a couple of considerations.  The retirement savings are protected from creditors, and if the participant is older, the more difficult it will be for the participant to put aside enough funds to make up for the lost savings later.

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July 23, 2012 at 6:04 pm Leave a comment

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Christine Gurney

A pension professional who shares her thoughts and ideas about the pension world for industry members and anyone else interested.

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