401k

A 401k is an employer-sponsored, long-term savings plan that is intended to help you sock-away money for your retirement. A 401k offers significant tax breaks and has a few drawbacks. The money you put away now to be used later after 59 ½ years of age or at retirement is not taxed until it is distributed. Some companies match part of the dollars that you stash away. Your retirement savings are increased through these employer matching contributions. You can borrow against a portion of a 401K, as long as you pay it back plus the low interest. Otherwise, if you tap into your savings before 59 ½, you pay penalties for early withdrawal and the early distribution is also treated as regular income for tax purposes.

Rule Allowing Financial Advisors to Provide Advice to 401k Customers is Suspended

The Department of Labor has suspended a Bush Administration rule that would have allowed financial advisors to provide investment advice to their 401k customers. The Pension and Protection Act of 2006 contains a provision that allows financial advisors who manage company 401k plans to provide investment guidance to the 401k plan participants. The DOL suspended the rule out of concern for apparent regarding conflict of interest . The concern is that the advisors who sell products may have...

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401k Participants Can "Replace a Chance with a Guarantee"

Larger 401k accounts (in excess of $200,000) dropped 25% on average in 2008. 95% percent of participants in defined contribution style 401k plans would pursue a "cash out" option if offered--essentially taking the lump sum of accumulated assets rather than an option to turn that pool of assets into a guaranteed stream of income . Only 25% of participants in defined benefit pension programs would accept the same lump sum "cash out" offer.

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The Top Reasons to Consider an Annuity

Annuities are complex, largely misunderstood, and often misrepresented in popular financial media.

The reality, though, is that these financial products are becoming an increasingly important part of the financial plans of millions of people around the world. In fact, annuities are a vital component of the...

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Target-Date Funds Popular Among Younger Investors Despite Recent Glitches

Target-date funds were given a huge boost by the Pension Protection Act of 2006. This legislation provides the basis for target-date funds to serve as default options in 401k plans. The result is that 43 percent of people in their 20s held target date funds at the end of 2008. Target-date funds attracted $41.8 billion in assets. This is despite the fact that certain target-date funds labelled 2010 (i.e. presumably for investors retiring in 2010) lost as much as 41 percent in 2008. Source:...

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TIAA-CREF CEO on Annuities as the Backbone of a 21st Century Retirement System

In a recent interview, TIAA-CREF CEO Roger Ferguson discusses post financial crisis retirement planning and CREF's role in the new retirement planning landscape. Ferguson believes that increasing longevity in the U.S. is a key driver of what will be a very different 21st century retirement system. Ferguson also suggests that stable sources of lifetime guaranteed income --in other words an annuity --should provide the "backbone" of the future system: It's really important to use this to educate...

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