401(k)

Waddell & Reed of Overland Park, Kan., will add two new share classes to its Waddell & Reed fund family in order to target supermarkets, 401(k) plans and wrap programs, the company announced last week.

The majority of 401(k) participants choose lump-sum cash payouts when changing jobs instead of rolling over money into their new employer's plans or IRAs, according to a study by Hewitt Associates, a management consulting firm in Lincolnshire, Ill.

Although assets in socially-responsible funds have grown from $1.185 trillion in 1997 to $2.16 trillion in 1999, socially-screened funds are under-represented in 401(k) plans, said mutual fund industry executives.

More than one-third of people who invest in IRAs, plan to use them as investment vehicles to bequeath money to their children or other heirs, according to a survey by American Skandia Life Assurance of Shelton, Conn.

Mutual fund companies providing 401(k)'s or other types of defined contribution plans may be in for a rash of lawsuits foiled by unhappy 401(k) investors, say industry executives and consultants.

T. Rowe Price of Baltimore, Md. recently filed with the SEC to offer a new class of shares in an effort to improve distribution of ten funds to variable annuities, defined contribution plans and wrap programs, according to a company spokesperson. The new shares will include a 12b-1 fee of 25 basis points.

The number of employees switching asset allocations in their 401(k) programs increased in the month of January, according to an index released by Hewitt Associates of Chicago that measures the daily activity of 401(k) assets of 1.5 million employees.

John Hancock Funds of Boston, has teamed up with Standard & Poor's of New York to provide retirement services to more than 1,000 companies nationwide.

Pure-play, or sector funds, are beginning to show up along with the usual investment options of 401(k) plans: large-, small- and mid-cap, growth and value investments, according to industry executives.

The average account balance for active 401(k) participants grew by 26 percent from 1996 to 1998, largely due to the continuing bull market in equities, according to a recent study by the Employee Benefit Research Institute and the Investment Company Institute, both of Washington, D.C.

Intuit of Mountain View, Calif. and TeamVest of Charlotte, N.C. have joined together to offer free online investment advice for 401(k) plan participants.

As of January 1, the Social Security Administration began phasing in an increase in the age at which retirees can receive full benefits, from 65 to 67. Congress passed a law in 1983 mandating these changes begin taking effect in January, 2000.

Investors in 401(k) plans have more investment options and receive more education about investing for their retirements than they did three years ago, according to the 1999 "Trends and Experience in 401(k) Plans" survey by Hewitt Associates, a management consulting company in Lincolnshire, Ill.

A growing number of fund companies are establishing alliances with third party 401(k) advisory firms in an effort to meet increasing demands for 401(k) advice.

Hartford Life Insurance Company of Simsbury, Conn., is looking to the person who helped launch its proprietary mutual fund family to increase sales of the firm's funds and annuities to 401(k) plans.

Participants in corporate defined contribution plans serviced by Fidelity Investments of Boston are saving an average of seven percent of their income, Fidelity has found.

American Century Investments of Kansas City, Mo. has teamed up with Automatic Data Processing of Roseland, N.J. to provide 401(k) plans to small businesses.

Retirement is the main reason people save and invest in only three of ten leading nations - in the U.S., Germany and the U.K., according to a survey commissioned by American Express of Minneapolis, Minn. People in France, Hong Kong, Italy, Singapore and Taiwan save money to have a cushion in case of an emergency, particularly in case of being laid off from their jobs.

Most employers are outsourcing their retirement plans, but a large number are not paying much attention to how well their plans are being managed for them, according to a study completed this summer for Delaware Investments of Philadelphia by Greenwald & Associates of Washington, D.C. It may be because of the bull market, according to one Delaware executive.

Only six percent of 401(k) plan participants who switch jobs roll their money over to the incumbent 401(k) provider, according to a study. Thirty-seven percent of participants place their savings in an IRA, according to the study by Hewitt Associates, the management consulting firm in Lincolnshire, Ill. Hewitt's analysis of 193,000 defined contribution distributions nationwide in 1998 also showed that 57 percent of the investors chose to cash out of their plans.