401(k)

The Department of Labor and the Securities and Exchange Commission have released the agenda and list of speakers at this Thursday’s hearing on target-date funds.

Americans are increasingly worried about their preparedness for retirement, The Hartford found in a survey. Thirty-four percent were either “extremely” or “very” worried about their ability to save for retirement, and 56% said they feared they would have to cut back on their contributions.

Although there have been reports of one-third of employers cutting back on or eliminating 401(k) matches, for the most part, they have continued to add other features to the plans to increase participation and investment rates, Charles Schwab found. And that has helped most workers stay the retirement savings course.

The U.S. House of Representatives has reintroduced a 401(k) fee disclosure bill, the fifth such bill to be considered by Congress.

Although there have been reports of about one-third of employers cutting back on or eliminating 401(k) matches, for the most part, they have continued to add other features to the plans to increase participation and investment rates, Charles Schwab found. And that has helped most workers stay the retirement savings course.

Citing the positive effects of diversification and continued contributions, Vanguard announced that the median decline in the three million defined contribution accounts it administers fell 17% in the 15 months ended March 31, as opposed to the market’s overall 44% decline.

The growing trend for companies to suspend or even eliminate 401(k) matches in this recession will inevitably translate into fewer people contributing to their retirement savings, writes Rockefeller Foundation Associate Vice President Janice M. Nittoli in an editorial in The Wall Street Journal titled, “Now Is No Time to Skimp on Retirement Plans.”

Great-West Retirement Services has launched an updated set of target-date funds that it believes will address some of the problems that were found with target-date funds in 2008.

After so many 2010 target-date funds came up short last year, Prudential Retirement investigated how they might be improved, and decided that including retirement income guarantees would be a key benefit. They would freeze the asset allocations of target-date funds five or 10 years prior to retirement, in exchange for guaranteed income.

Financial Engines has improved its 401(k) advice services with the launch of the Financial Engines Retirement Plan, a personalized statement that addresses each investor’s savings, investments and retirement income needs.

Older workers are much less confident about the outlook for their retirement security than they were two years ago, according to a survey of 2,200 workers by Watson Wyatt. Understandably, those with a pension plan are far more confident than those handling their own retirement savings through a 401(k).

In an interview with the Newark Star-Ledger, AARP CEO A. Barry Rand said he is intent on alleviating the “shock and pain” that is causing some people to believe it’s no longer possible to achieve the American dream.

In a challenge to one of mutual funds' strongholds, exchange-traded fund providers are targeting defined contribution plans.

How far the 401(k) has come since employers first introduced the savings plan in 1981. And how far it has yet to go. 401(k)s, I predict, will become universal in our lifetimes, supplanting all forms of pension plans.

While index funds already have a place in the lineup of most 401(k) plans, a proposed federal mandate to require at least one index fund option in these plans is intrusive and unnecessary, according to industry experts.

How far the 401(k) has come since employers first introduced the savings plan in 1981. And how far it has yet to go. 401(k)s, I predict, will become universal in our lifetimes, supplanting all forms of pension plans.

Citing the vast disparity in the performance of target-date funds, Morningstar by year-end will begin rating and researching target-date funds to make them more transparent and more easily comparable, for professional and retail investors alike, the research firm announced Thursday.

The Internal Revenue Service has proposed new rules that would grant safe harbor for employers experiencing substantial business hardship that want to suspend or reduce their 401(k) matches.

Besides learning that investors have not bailed out of their 401(k) plans, contrary to scare-mongering media reports, there was one other surprising moment at this month's General Membership Meeting of the Investment Company Institute. And that was when Richard Davis, chairman of U.S. Bancorp, looked directly at ICI President Paul Schott Stevens and urged him to prompt his member mutual fund companies to figure out how the financial crisis has affected various age groups.

Companies are finding that pension plans are far too expensive to offer, despite the tax breaks, USA Today reports. Since the beginning of the year, at least 20 companies have frozen their pension plans; by comparison, that many companies did so throughout all of 2008.