Defined contribution plans, and 401(k)s specifically, are increasingly under attack, criticized by think tanks and financial experts for their potential shortcomings in providing sufficient retirement income for workers. However, these plans remain a popular option for many employees looking to save for retirement through employer-sponsored programs.
One key aspect of 401(k) plans is the Employee Retirement Income Security Act of 1974 (ERISA), which sets minimum standards for most voluntarily established retirement and health plans in private industry. This rule protects retirement investors from improper investment recommendations and harmful conflicts of interest, ensuring that their savings are managed responsibly.
Two of the main types of assets that middle-income households own are already taxed in ways that resemble proposals to tax the unrealized gains in retirement accounts, such as 401(k)s. This has led to ongoing debates about the fairness and effectiveness of current retirement savings strategies, including the role of tax-advantaged accounts like 401(k)s.
The Securities and Exchange Commission's Investor Advisory Committee will host a panel discussion on the topic of who is required to serve as a fiduciary when providing investment advice on retirement plans, including 401(k)s. This reflects the ongoing efforts to enhance investor protection and transparency in retirement savings products.
If you're a high-earner who can't contribute to a Roth IRA, a mega backdoor Roth — particularly if your 401(k) plan allows it — might be a valuable alternative strategy for retirement savings. This highlights the importance of exploring different options within 401(k) plans to maximize savings potential for individuals with varying financial circumstances.
In this article, we look at the shift away from defined-benefit plans in the last few decades toward defined-contribution plans, such as 401(k)s. This trend reflects a broader movement towards employee-driven retirement savings strategies, emphasizing individual responsibility and flexibility in managing retirement funds.
EBSA head Gomez tells NAPA 401(k) Summit audience that the DOL is working on sharper definitions of what constitutes retirement saving, signaling potential changes in regulations and oversight of retirement plans like 401(k)s. This indicates a continued focus on improving the effectiveness and integrity of retirement savings programs.
Employees will be able to sock away more money into their 401(k)s next year, with updates to the 2024 defined benefit plan limits. This adjustment reflects ongoing efforts to encourage higher levels of retirement savings among workers through employer-sponsored programs like 401(k) plans.
IBM announced it is halting all their 401(k) matches to fund a defined benefit plan for its employees, illustrating a strategic shift in retirement benefit offerings within the company. This decision highlights the evolving landscape of retirement savings options and employer contributions in the context of changing economic conditions.
