Ideas On Fixing the 401(k) Plan

October 1, 2012 at 12:13 pm Leave a comment

Smartmoney has an article, ” How 401(k)s Could Work Much Better”, By Alicia Munnell discussing her suggestions regarding improving 401(k) plans.  Located on their website at http://blogs.smartmoney.com/encore/2012/09/26/how-401ks-could-work-much-better/?link=SM_hp_featStory, the author suggests requiring automatic enrollment and escalation.  She does not address if opting out would still be allowed.  If not, that would likely be an unpopular change.  She also suggests the use of passive investments for default funds.  I am not certain if she would use within the regulations of 404(c) – perhaps a passive balanced fund of indices.  I think she has some interesting ideas worth sharing.  In particular, her two final paragraphs seem to be for a call to return to the days of no participant investment direction.  It should be noted that 401(k) plans without participant direction still exist and are legal but have fallen out of favor in the last few decades.

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

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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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