Fixing Your 401(k) – Part 1

Did you know that over 50% of Americans have a 401(k) plan? For many of us it is our primary funding source of retirement savings. For some, it may be the only source of savings. http://www.gallup.com/poll/16564/Many-Consumers-Lack-Rainy-Day-Fund.aspx

401(k) Plans can be great for helping to fund your retirement – – IF you are saving enough and don’t fall into some common traps. I love 401(k)s and have a passion for helping companies and indviduals get more from their plans. With that in mind, I am going to address 5 major issues with 401(k) plans in my next several posts.

Around 1985, 401(k) plans passed pensions as the Primary Retirement Vehicle, as the New York Times states in a recent article.
http://roomfordebate.blogs.nytimes.com/2009/03/25/so-much-for-the-401k-now-what/?scp=4&sq=401k%20passed%20pension&st=cse

Pensions had been dying for a long time, mostly due to cost. 401(k)s require employees to contribute to their own retirement savings. Many companies provide a matching contribution of some sort, although in recent times, those have also been cut back.
http://www.nytimes.com/2008/12/21/your-money/401ks-and-similar-plans/21retire.html?_r=1&scp=5&sq=401k%20passed%20pension&st=cse

How did 401(k)s come into being?

In 1978, the Tax Reform Act passed (Provision Internal Revenue Code Section 401(k)), which allowed employees to receive a portion of their income as tax deferred compensation. Ted Benna
http://pipl.com/directory/people/Ted/Benna then created the first 401(k) in 1979. Also in that year, Johnson & Johnson, Honeywell, and Pepsico established 401(k) plans for their employees.

In my next post, we will look at the first serious issue which needs to be addressed in 401(k)s –
PARTICIPATION.

For more information, please contact me at http://www.helpmy401k.us/.

One Response to Fixing Your 401(k) – Part 1

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