Moneynews - Buffett Stuffing His Portfolio With Retail Stocks: "Warren Buffett is boosting his portfolio with retail stocks, MSN reports.
Buffett would likely recommend investors buy retail stocks for 2010, Michael Brush of MSN reported.
During the third quarter, Buffett increased his position in Wal-Mart by 19.9 million shares.
“Buffett is the consummate contrarian, and the retail sector is one of the few areas where you can still be contrarian after a market rally that's lifted most stocks this year,” said Brush, author of 'Lessons from the Front Line.”"
Wednesday, December 30, 2009
Wednesday, December 16, 2009
Moneynews - Investors Flock to Inflation Hedges
Moneynews - Investors Flock to Inflation Hedges: "Investors are pouring money into mutual funds and exchange traded funds that hold inflation-protected bonds and commodities as protection against inflation.
The worry is that the massive fiscal and monetary stimulus implemented to fight the recession won’t be withdrawn quickly enough to avoid a jump in inflation.
In November alone, investors allocated $3.9 billion to commodity-related mutual funds and ETFs and $2 billion to mutual funds holding inflation-protected bonds, according to research firm Morningstar.
Even stock funds are seeking hedges against inflation, putting money into basic materials companies and companies that can raise prices."
The worry is that the massive fiscal and monetary stimulus implemented to fight the recession won’t be withdrawn quickly enough to avoid a jump in inflation.
In November alone, investors allocated $3.9 billion to commodity-related mutual funds and ETFs and $2 billion to mutual funds holding inflation-protected bonds, according to research firm Morningstar.
Even stock funds are seeking hedges against inflation, putting money into basic materials companies and companies that can raise prices."
Obama’s IRA Proposal: How to Make It Better - CBS MoneyWatch.com
Obama’s IRA Proposal: How to Make It Better - CBS MoneyWatch.com: "Tucked into the Obama financial reform package�is a proposal to�automatically enroll employees in IRAs if their employer doesn’t have�a retirement plan. It’s a good�idea, but it can be improved by equalizing the IRA and 401(k) contribution limits and removing the employer mandate from the plan."
Wednesday, December 9, 2009
The Associated Press: New and improved 401(k) a possibility in 2010
The Associated Press: New and improved 401(k) a possibility in 2010: "When the stock market hit its all-time high in October 2007, few investors questioned the merits of their 401(k) plan. Two years later, their feelings are different.
As many investors continue to nurse the wounds of losing more than a third of their retirement savings, many question if there isn't a fundamental flaw in 401(k) plans. Should the system be scrapped and replaced with something without all the risk?
Though the volume of the calls for change have quieted a bit as the stock market soared about 60 percent since March, legions of investors remain anxious their 401(k) might them down again.
There are several ideas floating around Congress that include increased disclosure of fees in mutual funds and new regulations about 401(k) investment advice."
As many investors continue to nurse the wounds of losing more than a third of their retirement savings, many question if there isn't a fundamental flaw in 401(k) plans. Should the system be scrapped and replaced with something without all the risk?
Though the volume of the calls for change have quieted a bit as the stock market soared about 60 percent since March, legions of investors remain anxious their 401(k) might them down again.
There are several ideas floating around Congress that include increased disclosure of fees in mutual funds and new regulations about 401(k) investment advice."
Washington Goes into 401(k) Withdrawal - CBS MoneyWatch.com
Washington Goes into 401(k) Withdrawal - CBS MoneyWatch.com: "The Obama Administration has decided we are going to make a mess of managing our 401(k)s in retirement and wants to do something about it. Both the Treasury Department and the Labor Department have signaled their 2010 agendas will include taking a look at how to reform the 401(k) withdrawal process to keep us from blowing through our savings too fast.
The Feds are interested in adding an annuity feature to 401(k)s that would throw off a guaranteed monthly income for retirees based on the amount of 401(k) assets a retiree converts into the annuity.
Given the well documented problems we have had managing our accounts while we are working — in large part due to poorly designed plans foisted on us — it’s a reasonable concern that we won’t be able to get the decumulation phase right either."
The Feds are interested in adding an annuity feature to 401(k)s that would throw off a guaranteed monthly income for retirees based on the amount of 401(k) assets a retiree converts into the annuity.
Given the well documented problems we have had managing our accounts while we are working — in large part due to poorly designed plans foisted on us — it’s a reasonable concern that we won’t be able to get the decumulation phase right either."
Washington Goes into 401(k) Withdrawal - CBS MoneyWatch.com
Washington Goes into 401(k) Withdrawal - CBS MoneyWatch.com: "The Obama Administration has decided we are going to make a mess of managing our 401(k)s in retirement and wants to do something about it. Both the Treasury Department and the Labor Department have signaled their 2010 agendas will include taking a look at how to reform the 401(k) withdrawal process to keep us from blowing through our savings too fast.
The Feds are interested in adding an annuity feature to 401(k)s that would throw off a guaranteed monthly income for retirees based on the amount of 401(k) assets a retiree converts into the annuity.
Given the well documented problems we have had managing our accounts while we are working — in large part due to poorly designed plans foisted on us — it’s a reasonable concern that we won’t be able to get the decumulation phase right either."
The Feds are interested in adding an annuity feature to 401(k)s that would throw off a guaranteed monthly income for retirees based on the amount of 401(k) assets a retiree converts into the annuity.
Given the well documented problems we have had managing our accounts while we are working — in large part due to poorly designed plans foisted on us — it’s a reasonable concern that we won’t be able to get the decumulation phase right either."
Thursday, July 2, 2009
11% of wealthy stop 401(k) contributions
leven percent of wealthy individuals surveyed by Phoenix Cos. have stopped contributing to their 401(k) plans, and 8% said their spouses or partners have done the same.
Nearly one-third of high-net-worth individuals — defined by Phoenix in the Phoenix Wealth Survey as having more than $1 million in assets, minus their primary residences — reported making changes to their 401(k) plans, the survey found. Five percent said they have reduced their contributions, and 5% said their spouses or partners had cut their contribution levels.
“The current crisis has rocked this segment of the market like it never has,” Walter Zultowski, senior vice president, research and concept development at Phoenix, said in an interview. “In the past, high-net-worth individuals have been very resilient. It's different this time.”
Nearly one-third of high-net-worth individuals — defined by Phoenix in the Phoenix Wealth Survey as having more than $1 million in assets, minus their primary residences — reported making changes to their 401(k) plans, the survey found. Five percent said they have reduced their contributions, and 5% said their spouses or partners had cut their contribution levels.
“The current crisis has rocked this segment of the market like it never has,” Walter Zultowski, senior vice president, research and concept development at Phoenix, said in an interview. “In the past, high-net-worth individuals have been very resilient. It's different this time.”
Tuesday, June 9, 2009
When you should ditch your 401k
Eight months ago, long before it went into Chapter 11, General Motors stopped matching workers' contributions to 401k retirement plans. Since then, one-fifth of U.S. employers have done likewise or at least reduced the amount of their matches, according to a survey by consulting company Watson Wyatt.
If your employer is one of these, it's time to consider shooting a sacred cow -- by dropping out of the 401k system.
If your employer is one of these, it's time to consider shooting a sacred cow -- by dropping out of the 401k system.
Friday, June 5, 2009
FinCEN Moves to Streamline Mutual Fund BSA Requirements Proposal Would Require Mutual Funds to File CTRs
The Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) that would replace a mutual fund requirement to file IRS/FinCEN Form 8300 - Report of Cash Payments Over $10,000 Received in a Trade or Business - with a requirement to file FinCEN Form 104, Currency Transaction Report (CTR), which is standard for financial institutions. Both forms document a transaction in currency above $10,000, but differ in some technical aspects.
"If adopted this proposal will bring the mutual fund industry into greater conformity with the rest of the financial industry, which currently files CTRs," said FinCEN Director James H. Freis, Jr. "The proposal would also free mutual funds from having to report applicable transactions involving certain negotiable instruments by moving to the CTR filing requirement and reduce paperwork for mutual funds and help FinCEN more directly identify suspicious activity involving money laundering and fraud."
"If adopted this proposal will bring the mutual fund industry into greater conformity with the rest of the financial industry, which currently files CTRs," said FinCEN Director James H. Freis, Jr. "The proposal would also free mutual funds from having to report applicable transactions involving certain negotiable instruments by moving to the CTR filing requirement and reduce paperwork for mutual funds and help FinCEN more directly identify suspicious activity involving money laundering and fraud."
Tuesday, May 19, 2009
Tips to Keep Your 401(k) Plan on Track - 5/19/2009 - insurancenewsnet.com
Tips to Keep Your 401(k) Plan on Track - 5/19/2009 - insurancenewsnet.com: "Main article
401(k) plans took a beating in 2008, and 2009 is proving that the bad times aren't over yet. Looking forward, there are several issues plan sponsors need to address in reviewing their plans, from the plan's governance to the choices of a low-risk investment option.
'Plan sponsors face many challenges in developing a well-structured DC plan to help meet the retirement requirements of their participants, while minimizing the fiduciary risk of managing the plan and its investment lineup,' said Barbara Marder, global leader of Mercer's defined contribution consulting business. 'The significant decline in the capital markets has ramifications for recordkeepers, trustees, and investment managers.'
10 Issues to Investigate
To keep their plans on sound footing, Mercer suggests that plan sponsors investigate 10 key issues:"
401(k) plans took a beating in 2008, and 2009 is proving that the bad times aren't over yet. Looking forward, there are several issues plan sponsors need to address in reviewing their plans, from the plan's governance to the choices of a low-risk investment option.
'Plan sponsors face many challenges in developing a well-structured DC plan to help meet the retirement requirements of their participants, while minimizing the fiduciary risk of managing the plan and its investment lineup,' said Barbara Marder, global leader of Mercer's defined contribution consulting business. 'The significant decline in the capital markets has ramifications for recordkeepers, trustees, and investment managers.'
10 Issues to Investigate
To keep their plans on sound footing, Mercer suggests that plan sponsors investigate 10 key issues:"
Monday, May 18, 2009
The SPARK Institute Defends 401(k) Plans, Recommends Changes to Increase Coverage and Participation
The SPARK Institute Defends 401(k) Plans, Recommends Changes to Increase Coverage and Participation: "The SPARK Institute today issued a white paper, 'The Case for Employer-Sponsored Retirement Plans - Coverage, Participation and Retirement Security,' that defends 401(k) and similar workplace retirement plans that have been criticized recently based on misunderstandings and misconceptions. '401(k) plans are the best vehicles for saving for retirement, however, improvements can be made and our paper makes a number of recommendations,' said Larry Goldbrum, General Counsel of The SPARK Institute. The white paper is available at www.sparkinstitute.org/comments-and-materials.php."
Friday, May 15, 2009
401k - IRA Rollover - IRA Rollover Rules, Forms, and Solutions
401k - IRA Rollover - IRA Rollover Rules, Forms, and Solutions: "www.cakefinancial.com So you’re interested in an overview of 401(k) plans. A 401(k) plan is a special type of investment account, offered by employers and designed to help you save for retirement. You contribute money to your 401(k) plan through pre-tax payroll deductions. In other words, the money comes straight from your paycheck. Once the money is in the 401(k) plan, you can then allocate it to different investments, depending on your plan. Usually, you can choose from a number of …"
Thursday, May 14, 2009
Commentary: Social Security healthier than your 401(k) - CNN.com
We are almost at the top of the roller coaster. Hold on tight because the drop is coming soon. So they are saying 401(k) is no longer the way to go. Hmmmmm....
Commentary: Social Security healthier than your 401(k) - CNN.com: "The 2009 Social Security Trustees report released Tuesday provides a basis for assessing how each held up. On the one hand, assets in 401(k) accounts -- which are predominantly in stocks -- have declined in value by about a third, employers are suspending matching contributions, and millions of unemployed workers have seen their retirement savings efforts disrupted.
On the other hand, the Social Security Administration continues to send out monthly checks to 35 million retirees and their spouses, 9 million disabled workers and their families, and 6 million families whose breadwinner has died. In other words, the government system has proved to be much less fragile than the private system of retirement savings."
Commentary: Social Security healthier than your 401(k) - CNN.com: "The 2009 Social Security Trustees report released Tuesday provides a basis for assessing how each held up. On the one hand, assets in 401(k) accounts -- which are predominantly in stocks -- have declined in value by about a third, employers are suspending matching contributions, and millions of unemployed workers have seen their retirement savings efforts disrupted.
On the other hand, the Social Security Administration continues to send out monthly checks to 35 million retirees and their spouses, 9 million disabled workers and their families, and 6 million families whose breadwinner has died. In other words, the government system has proved to be much less fragile than the private system of retirement savings."
So Now They Tell Me -- or Whatever Happened to My 401(k)? | The Jewish Exponent
So Now They Tell Me -- or Whatever Happened to My 401(k)? | The Jewish Exponent: "Recent stock-market declines have affected virtually every sector of the economy, but the impact on retirement accounts has been the most worrisome for many people.
Retirement accounts have lost about $2 trillion over the past two years due to market declines, according to Congressional Budget Office estimates.
But don't despair!"
Retirement accounts have lost about $2 trillion over the past two years due to market declines, according to Congressional Budget Office estimates.
But don't despair!"
Wednesday, May 13, 2009
Demand For Green, Social 401(k) Plans Grows - WSJ.com
Demand For Green, Social 401(k) Plans Grows - WSJ.com: "More workers are trying to align their values and their retirement savings by opting for socially responsible investments in their 401(k) plans.
Many of those initially in SRI were in academia or nonprofit sectors who wanted their investments to have a positive social impact. Today, younger workers and mainstream investors are demanding them as options in their retirement accounts - especially so-called green funds.
'I think a lot has to do with a shift in the perception of investing,' says Joe Keefe, chief executive of PAX World Mutual Funds, saw the number of companies utilizing Pax World Funds through one of the major platforms jump in the last year to 44 from 15.
Investors were turned off by bloated CEO salaries and other questionable business practices that made headlines in the financial crisis. Keefe says they 'see sustainability and good governance as better for their portfolios.'"
Many of those initially in SRI were in academia or nonprofit sectors who wanted their investments to have a positive social impact. Today, younger workers and mainstream investors are demanding them as options in their retirement accounts - especially so-called green funds.
'I think a lot has to do with a shift in the perception of investing,' says Joe Keefe, chief executive of PAX World Mutual Funds, saw the number of companies utilizing Pax World Funds through one of the major platforms jump in the last year to 44 from 15.
Investors were turned off by bloated CEO salaries and other questionable business practices that made headlines in the financial crisis. Keefe says they 'see sustainability and good governance as better for their portfolios.'"
PersonalFinance: A plan for your 401(k) | Special Coverage | Reuters
PersonalFinance: A plan for your 401(k) | Special Coverage | Reuters: "WASHINGTON (Reuters) - There's a lot about 401(k) accounts in the news lately, and much of it is unsettling.
There are reports of workers finding their 401(k) contributions locked into investments they can't sell, and of hidden fees skimming value off the top of retirement funds. Big-name employers are doing away with matching contributions, so the only money going into employees' accounts comes out of their own paychecks. Finally, too many employees had no choice but to watch their hard-earned retirement savings evaporate in the great market meltdown of 2008/9.
What's an employee to do? Stop saving at work? Some in the 401(k) industry are a little bit smug about this. They point out that even if your plan isn't very good, and even if your employer has stopped matching your contributions, you can't beat the tax advantages of putting money into an employer-sponsored tax-deferred retirement plan.
That's not exactly true. You may have other tax-favored options."
There are reports of workers finding their 401(k) contributions locked into investments they can't sell, and of hidden fees skimming value off the top of retirement funds. Big-name employers are doing away with matching contributions, so the only money going into employees' accounts comes out of their own paychecks. Finally, too many employees had no choice but to watch their hard-earned retirement savings evaporate in the great market meltdown of 2008/9.
What's an employee to do? Stop saving at work? Some in the 401(k) industry are a little bit smug about this. They point out that even if your plan isn't very good, and even if your employer has stopped matching your contributions, you can't beat the tax advantages of putting money into an employer-sponsored tax-deferred retirement plan.
That's not exactly true. You may have other tax-favored options."
Tuesday, May 12, 2009
Article - WSJ.com
Article - WSJ.com: "Demand For Green, Social 401(K) Plans Growing,' published at 10:49 a.m. EDT, misstated in the third paragraph that PAX World Mutual Funds has seen the number of major investment platforms carrying its funds jump this year to 44 from 15 in 2008. Rather, the number of companies utilizing Pax World Funds through one of the major platforms jumped in the last year to 44 from 15. The correct version follows.)
NEW YORK (Dow Jones)--More workers are trying to align their values and their retirement savings by opting for socially responsible investments in their 401(k) plans."
NEW YORK (Dow Jones)--More workers are trying to align their values and their retirement savings by opting for socially responsible investments in their 401(k) plans."
Monday, May 11, 2009
401(k) auto enrollment not in Obama budget - Pensions & Investments
401(k) auto enrollment not in Obama budget - Pensions & Investments: "A proposal that would require automatic enrollment of participants in existing 401(k) plans was not included in President Barack Obama’s fiscal 2010 budget, said Ed Ferrigno, vice president, Profit Sharing/401(k) Council of America.
As recently as May 7, Thomas E. Gavin, spokesman for the White House’s Office of Management and Budget, had insisted that the proposal would be included in the detailed analysis of the budget that OMB released today."
As recently as May 7, Thomas E. Gavin, spokesman for the White House’s Office of Management and Budget, had insisted that the proposal would be included in the detailed analysis of the budget that OMB released today."
Friday, May 8, 2009
Will Obama Seize Americans’ 401k and IRA Funds?
Will Obama Seize Americans’ 401k and IRA Funds?: "There is a rumor floating around that Obama will seize Americans’ retirement funds, like Argentina and some other countries have done.
Two investment newsletters - Green Chip Review and The Mining Speculator - have recently claimed that the 401k seizure is a sure thing.
Is this just crazy talk, or is there something to it?
And in October of 2008, the idea of confiscating private 401k and IRA accounts and replacing them with government accounts gained wide traction. See this, this, this, and this.
But are those plans still in the works, or has the idea been abandoned?"
Two investment newsletters - Green Chip Review and The Mining Speculator - have recently claimed that the 401k seizure is a sure thing.
Is this just crazy talk, or is there something to it?
And in October of 2008, the idea of confiscating private 401k and IRA accounts and replacing them with government accounts gained wide traction. See this, this, this, and this.
But are those plans still in the works, or has the idea been abandoned?"
Wednesday, May 6, 2009
Changes Coming for the 401(k) Plan - WSJ.com
Changes Coming for the 401(k) Plan - WSJ.com: "Policy makers and some industry representatives say major changes to retirement investing and 401(k) plans are becoming increasingly likely under the Democratic Party's control of Congress.
Proposed legislation gaining momentum in the House and Senate would require the industry to break out 401(k) fees on investors' statements, and would essentially repeal Bush administration regulations allowing mutual-fund companies to offer personalized advice to 401(k) participants in the plans the companies manage.
In another proposed change, President Obama's 2010 budget calls for the future establishment of a program in which all workers would be automatically enrolled in employers' retirement plans. Now, in most cases, they must opt in to participate. Also under the administration's plan, employers that don't offer a retirement plan would be required to enroll their employees in a direct-deposit individual retirement account. Employees would be able to opt out of either approach."
Proposed legislation gaining momentum in the House and Senate would require the industry to break out 401(k) fees on investors' statements, and would essentially repeal Bush administration regulations allowing mutual-fund companies to offer personalized advice to 401(k) participants in the plans the companies manage.
In another proposed change, President Obama's 2010 budget calls for the future establishment of a program in which all workers would be automatically enrolled in employers' retirement plans. Now, in most cases, they must opt in to participate. Also under the administration's plan, employers that don't offer a retirement plan would be required to enroll their employees in a direct-deposit individual retirement account. Employees would be able to opt out of either approach."
Tuesday, May 5, 2009
LewRockwell.com Blog: More 401k Concerns
LewRockwell.com Blog: More 401k Concerns: "Some investors in 401(k) retirement funds who are moving to grab their money are finding they can't.
Even with recent gains in stocks such as Monday's, the months of market turmoil have delivered a blow to some 401(k) participants: freezing their investments in certain plans. In some cases, individual investors can't withdraw money from certain retirement-plan options. In other cases, employers are having trouble getting rid of risky investments in 401(k) plans."
Even with recent gains in stocks such as Monday's, the months of market turmoil have delivered a blow to some 401(k) participants: freezing their investments in certain plans. In some cases, individual investors can't withdraw money from certain retirement-plan options. In other cases, employers are having trouble getting rid of risky investments in 401(k) plans."
Does America need a new retirement system? - Personal finance- msnbc.com
Does America need a new retirement system? - Personal finance- msnbc.com: "Should we be rethinking our retirement savings system?
“It’s time to have a campaign like we’ve had in health care in this country,” says Karen Friedman, policy director of the consumer advocacy group the Pension Rights Center, “We need to recognize a basic American ideal that everybody should be able to retire and make ends meet.”
Here are some ideas circulating from those who hope to strengthen — or completely rebuild — the way we approach retirement:"
“It’s time to have a campaign like we’ve had in health care in this country,” says Karen Friedman, policy director of the consumer advocacy group the Pension Rights Center, “We need to recognize a basic American ideal that everybody should be able to retire and make ends meet.”
Here are some ideas circulating from those who hope to strengthen — or completely rebuild — the way we approach retirement:"
How ETFs Can Fix the 401(k) Industry-05/04/2009
How ETFs Can Fix the 401(k) Industry-05/04/2009: "The defined contribution retirement plan as we know it could soon be going the way of the dinosaur. This leaves a gaping hole open for exchange traded funds (ETFs) to seize the opportunity and help out the future of America’s workers.
Not only have many workers suffered major losses within their 401(k) plans, many employers have ceased to contribute to their employees plans, giving the future of working America a desperate outlook. David P. Loeper for Investment News reports that even many target date mutual funds, designed to protect participants’ plan balances as they approach retirement, have lost more than 30% of their value.
In Congress, various plans are starting to go in motion. Ideas range from nationalization to complete fee disclosure to try and fix this broken system."
Not only have many workers suffered major losses within their 401(k) plans, many employers have ceased to contribute to their employees plans, giving the future of working America a desperate outlook. David P. Loeper for Investment News reports that even many target date mutual funds, designed to protect participants’ plan balances as they approach retirement, have lost more than 30% of their value.
In Congress, various plans are starting to go in motion. Ideas range from nationalization to complete fee disclosure to try and fix this broken system."
Thursday, April 23, 2009
The SPARK Institute Makes the Case for 401(k) Plans
The SPARK Institute Makes the Case for 401(k) Plans: "'Employer-sponsored retirement programs, particularly 401(k) plans, have been under attack based on many misperceptions and misunderstandings,' said Goldbrum. 'As a result, we felt it was necessary to set the record straight with facts.'
'The 401(k) plan system is successful, fundamentally sound, competitive and innovative,' Goldbrum said. 'Since their inception, they have helped tens of millions of American workers save and increase their retirement savings for their post-work years.'"
'The 401(k) plan system is successful, fundamentally sound, competitive and innovative,' Goldbrum said. 'Since their inception, they have helped tens of millions of American workers save and increase their retirement savings for their post-work years.'"
Retirement Dreams Disappear With 401(k)s - CBS News
Retirement Dreams Disappear With 401(k)s - CBS News: "The effects of the current economic crisis have touched everyone. Even if you still have a good job and a paid up mortgage, chances are your monthly 401(k) statement will remind you that you've lost a good chunk of your savings.
Trillions of dollars have evaporated from those accounts that have become the prime source of retirement funds for a majority of American workers, affecting their psyche and their future. If you are still young enough, there's time to rebuild and recover, but if you are in your 50s, 60s or beyond the consequences can be dire, and its drawing attention to the shortcomings of a retirement system that has jeopardized the financial security of tens of millions of people."
Trillions of dollars have evaporated from those accounts that have become the prime source of retirement funds for a majority of American workers, affecting their psyche and their future. If you are still young enough, there's time to rebuild and recover, but if you are in your 50s, 60s or beyond the consequences can be dire, and its drawing attention to the shortcomings of a retirement system that has jeopardized the financial security of tens of millions of people."
IFAwebnews.com | Congressmen seek changes to U.S. 401(k) system
IFAwebnews.com | Congressmen seek changes to U.S. 401(k) system: "Two congressmen want changes to the nation’s 401(k) plans, including greater disclosure of fees and better access to information about plans for participants.
Rep. Robert Andrews (D-N.J.), chairman of the House Health, Employment, Labor and Pensions Subcommittee and Rep. George Miller (D-Calif.), chairman of the House Labor and Education Committee, are expected to reintroduce legislation that failed last year, when the nation’s 401(k)s lost more than $2 trillion."
Rep. Robert Andrews (D-N.J.), chairman of the House Health, Employment, Labor and Pensions Subcommittee and Rep. George Miller (D-Calif.), chairman of the House Labor and Education Committee, are expected to reintroduce legislation that failed last year, when the nation’s 401(k)s lost more than $2 trillion."
Why the 401(k) Industry Needs Reform Right Now | ETF Trends
Why the 401(k) Industry Needs Reform Right Now | ETF Trends: "The criticism of the 401(k) industry is getting louder and harder to ignore, and even Congress is paying attention. Rep. George Miller has a schedule of reforms that many investors and experts would like to see implemented. Rep. Miller is taking the mutual fund industry to task over their hand in the decimation of many individual investors’ portfolios, and this could solidify the case for ETFs to enter into this investment arena once and for all.
There are two big issues here: extremely poor fee disclosure and a lack of good education. Rep. Miller is working hard to take on this issue on both fronts.
This Sunday’s 60 Minutes focused on the need for more reform within the 401(k) industry. Watch it at CBS’s website."
There are two big issues here: extremely poor fee disclosure and a lack of good education. Rep. Miller is working hard to take on this issue on both fronts.
This Sunday’s 60 Minutes focused on the need for more reform within the 401(k) industry. Watch it at CBS’s website."
Friday, April 17, 2009
How to Roll Over Your 401(k) Into an IRA | 401K | Retirement | Mainstreet
How to Roll Over Your 401(k) Into an IRA | 401K | Retirement | Mainstreet: "Have you recently been laid off, or left money in 401(k) plans at previous employers? You can move your retirement funds to a rollover IRA, a tax-advantaged individual retirement account you can open yourself, even without an employer."
All about IRA: 401k Investor Guide For the Clueless
All about IRA: 401k Investor Guide For the Clueless: "In your 401k plan you need to make two basic major decisions. First, how much to contribute each pay period. Second, how to invest. Consider this your basic investor guide to how to invest in your 401k plan.
We'll take this step by step, and keep it simple. This investor guide is designed to get you started down the right path. As you gain experience and learn how to invest, you can then fine tune your investment strategy."
We'll take this step by step, and keep it simple. This investor guide is designed to get you started down the right path. As you gain experience and learn how to invest, you can then fine tune your investment strategy."
Thursday, April 9, 2009
Capitol Weekly: Calpensions: Push to overhaul private-sector pensions
Capitol Weekly: Calpensions: Push to overhaul private-sector pensions: "Government retirement systems have to worry about rebuilding their pension funds without squeezing taxpayers or forcing deep cuts in other government services. But their retirees will continue to receive monthly checks.
In the private sector, individuals with 401(k) investment plans devastated in the stock market crash are simply out of luck, if they can’t wait years or decades for earnings to rebuild their funds.
Now there is at least one organized drive, Retirement USA (and reportedly talk among other groups) pushing for an overhaul of private-sector retirement plans and extending coverage to the half of all U.S. workers who only have Social Security."
In the private sector, individuals with 401(k) investment plans devastated in the stock market crash are simply out of luck, if they can’t wait years or decades for earnings to rebuild their funds.
Now there is at least one organized drive, Retirement USA (and reportedly talk among other groups) pushing for an overhaul of private-sector retirement plans and extending coverage to the half of all U.S. workers who only have Social Security."
Monday, April 6, 2009
Less than half of U.S. 401(k) money in stocks, report finds - It's Only Money
Less than half of U.S. 401(k) money in stocks, report finds - It's Only Money: "But it's not what you might think.
For the first time in at least a dozen years -- maybe ever -- Americans have less than half their 401(k) assets invested in stocks, The New York Times reports. Yet it's not because they shifted a bunch of their assets (only 6 percent has been moved to fixed-income investments), according to Hewitt Associates. And more than half of all new contributions are still invested in equities.
Why the plunge, then? '... the equity stake in these accounts contracted with the market,' the story reveals.
Another reason to at least consider whether your account's investments need to be rebalanced."
For the first time in at least a dozen years -- maybe ever -- Americans have less than half their 401(k) assets invested in stocks, The New York Times reports. Yet it's not because they shifted a bunch of their assets (only 6 percent has been moved to fixed-income investments), according to Hewitt Associates. And more than half of all new contributions are still invested in equities.
Why the plunge, then? '... the equity stake in these accounts contracted with the market,' the story reveals.
Another reason to at least consider whether your account's investments need to be rebalanced."
Friday, March 20, 2009
Government To Confiscate 401(k)s and IRAs For Mandatory Savings Tax?
Government To Confiscate 401(k)s and IRAs For Mandatory Savings Tax?: "Under the pretext of combating the financial crisis, Democrats in Congress have been conducting hearings on proposals to confiscate private retirement accounts and turn them into government-controlled accounts managed by the Social Security Administration, by implementing a new tax in the guise of mandatory savings scheme.
Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, testified before Congress last month, proposing that 401(k)s and IRAs be confiscated and converted into universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration."
Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, testified before Congress last month, proposing that 401(k)s and IRAs be confiscated and converted into universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration."
Would Obama, Dems Kill 401(k) Plans? - Capital Commerce (usnews.com)
Would Obama, Dems Kill 401(k) Plans? - Capital Commerce (usnews.com): "I hate to use the 'S' word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers' retirement accounts (Efharisto, Fausta's Blog). Now, even Uncle Sam isn't that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans."
GOPUSA - The Loft
GOPUSA - The Loft: "And so we have it... the 'change' we can believe in. Over the last three years or so, Americans have wanted 'change,' and change is exactly what we have received. Since the Democrats have come to power, unemployment is going up and the stock market is going down. The housing market has collapsed, and the power of big government has grown by leaps and bounds."
Thursday, March 19, 2009
Newsmax.com - Dodd Admits Role in AIG Bonus Scandal
Newsmax.com - Dodd Admits Role in AIG Bonus Scandal: "Dodd, the chairman of the Senate Banking Committee, told CNN that the request came from Obama administration officials whom he did not identify.
The provision was the subject of new attention this week because, had it survived, it would have prevented the American International Group Inc. from granting $165 million in bonuses to employees of its financial products division.
While the House and Senate reconciled their different stimulus bills last month, the Treasury Department expressed concern with a Senate restriction on bonuses, noting that if it applied to existing compensation contracts it could face a legal challenge.
'The alternative was losing, in my view, the entire section on executive excessive compensation,' Dodd told CNN. 'Given a choice, this is not an uncommon occurrence here, I agreed to a modification in the legislation, reluctantly.'"
The provision was the subject of new attention this week because, had it survived, it would have prevented the American International Group Inc. from granting $165 million in bonuses to employees of its financial products division.
While the House and Senate reconciled their different stimulus bills last month, the Treasury Department expressed concern with a Senate restriction on bonuses, noting that if it applied to existing compensation contracts it could face a legal challenge.
'The alternative was losing, in my view, the entire section on executive excessive compensation,' Dodd told CNN. 'Given a choice, this is not an uncommon occurrence here, I agreed to a modification in the legislation, reluctantly.'"
Is Obama going to Nationalize 401k Plans? | eRollover
Is Obama going to Nationalize 401k Plans? | eRollover: "Is an Obama 401k right for you?
401k, Self Directed IRA, IRA Rollover, Roth IRA, Obama 401k, Nationalize 401k
This proposal is in the 2010 Budget and may be a start of a Government take over of the American 401k and Retirement Account system. Obama is giving retirement, IRA, and 401k savers something to monitor closely….
President Barack Obama is calling for establishing automatic workplace pensions and expanding unemployment insurance as part of his spending plan for the U.S. Labor Department next fiscal year. We liken this to an “Obama 401k Plan”"
401k, Self Directed IRA, IRA Rollover, Roth IRA, Obama 401k, Nationalize 401k
This proposal is in the 2010 Budget and may be a start of a Government take over of the American 401k and Retirement Account system. Obama is giving retirement, IRA, and 401k savers something to monitor closely….
President Barack Obama is calling for establishing automatic workplace pensions and expanding unemployment insurance as part of his spending plan for the U.S. Labor Department next fiscal year. We liken this to an “Obama 401k Plan”"
Wednesday, March 18, 2009
Piracy Police Want FTC To Investigate Google Cloud Services | Search Journal
Looks like Google is the next big entity to get nickel and dimed by the government.
Piracy Police Want FTC To Investigate Google Cloud Services | Search Journal: "The Washington-based Electronic Privacy Information Center (EPIC) has asked the Federal Trade Commission to open an investigation of Google's cloud computing services including Gmail, Google Docs, Google Desktop, Google Calendar and Picasa to determine 'the adequacy of the privacy and security safeguards' and enjoin Google from offering them until they are.
It wants Google ordered to revise its terms of service, make its security policies more transparent, report all incidents of data loss and data breach to the FTC and kick in $5 million to a public fund to support research into privacy-enhancing technologies.
What got EPIC's lather up was the discovery a couple of weeks ago that Google's vaunted Google Docs service accidentally shared some users' documents with folks who weren't authorized to see them.
Piracy Police Want FTC To Investigate Google Cloud Services | Search Journal: "The Washington-based Electronic Privacy Information Center (EPIC) has asked the Federal Trade Commission to open an investigation of Google's cloud computing services including Gmail, Google Docs, Google Desktop, Google Calendar and Picasa to determine 'the adequacy of the privacy and security safeguards' and enjoin Google from offering them until they are.
It wants Google ordered to revise its terms of service, make its security policies more transparent, report all incidents of data loss and data breach to the FTC and kick in $5 million to a public fund to support research into privacy-enhancing technologies.
What got EPIC's lather up was the discovery a couple of weeks ago that Google's vaunted Google Docs service accidentally shared some users' documents with folks who weren't authorized to see them.
Tuesday, March 17, 2009
Moneynews - Unions Want to Take Over Your 401(k)
Moneynews - Unions Want to Take Over Your 401(k): "One of the nation's largest labor unions, the Service Employees International Union (SEIU), is promoting a plan that will centralize all retirement plans for American workers, including private 401(k) plans, under one new 'retirement system' for the United States."
Monday, March 16, 2009
401(k) Plans Need Fixes, Advocates Tell Lawmakers (Update1) - Bloomberg.com
401(k) Plans Need Fixes, Advocates Tell Lawmakers (Update1) - Bloomberg.com: "U.S. lawmakers should reform retirement plans after 401(k) and Individual Retirement Accounts lost more than $2 trillion in value since October 2007, a group of consumer and labor groups said.
The new consumer-labor group, “Retirement USA,” backed by the Pension Rights Center, the Service Employees International Union and the Economic Policy Institute, said the flagging economy has highlighted the inadequacies of 401(k) plans and increased the need for alternatives such as government-managed funds run with professional oversight."
The new consumer-labor group, “Retirement USA,” backed by the Pension Rights Center, the Service Employees International Union and the Economic Policy Institute, said the flagging economy has highlighted the inadequacies of 401(k) plans and increased the need for alternatives such as government-managed funds run with professional oversight."
Monday, March 2, 2009
U.S. may need new retirement savings plans: lawmaker | U.S. | Reuters
U.S. may need new retirement savings plans: lawmaker | U.S. | Reuters: "The United States may need to create another kind of retirement security program now that trillions of dollars have evaporated from workers' retirement savings, a senior Democratic lawmaker said on Tuesday.
For too many Americans, the 401(k) plans that dominate U.S. private-sector retirement savings 'have become little more than a high-stakes crap shoot,' said Rep. George Miller, chairman of the House Education and Labor Committee.
'If you didn't take your retirement savings out of the market before the (stock market) crash, you are likely to take years to recoup your losses, if at all,' the California Democrat said. The 401(k) plans are tax-advantaged savings plans named after a provision of the U.S. tax code.
In the short term, the United States should preserve and strengthen 401(k) plans and root out hidden fees that are eating up much of workers' savings, Miller told a hearing on retirement security."
For too many Americans, the 401(k) plans that dominate U.S. private-sector retirement savings 'have become little more than a high-stakes crap shoot,' said Rep. George Miller, chairman of the House Education and Labor Committee.
'If you didn't take your retirement savings out of the market before the (stock market) crash, you are likely to take years to recoup your losses, if at all,' the California Democrat said. The 401(k) plans are tax-advantaged savings plans named after a provision of the U.S. tax code.
In the short term, the United States should preserve and strengthen 401(k) plans and root out hidden fees that are eating up much of workers' savings, Miller told a hearing on retirement security."
Why it’s time to create an auto-IRA - Money Features
Why it’s time to create an auto-IRA - Money Features: "Tucked in among the ambitious programs laid out in President Barack Obama’s proposed 2010 budget yesterday was a welcome provision for employees of small businesses: the creation of an automatic Individual Retirement Account (IRA). As Obama pointed out in his budget proposal, some 75 million Americans—roughly half of all workers—lack any sort of employer-based retirement plan, such as a 401(k). And that group includes most employees of small businesses."
Wednesday, February 25, 2009
PhillyDeals: The 401(k) under fire in Washington | Philadelphia Inquirer | 02/25/2009
PhillyDeals: The 401(k) under fire in Washington | Philadelphia Inquirer | 02/25/2009: "Congress is weighing whether to set up a guaranteed, forced worker-savings program to supplement Social Security.
That's after the value of worker-run personal investment plans - Individual Retirement Accounts and 401(k)-style programs - fell 27 percent, or $2.5 trillion, in less than two years, retired Vanguard Group founder John C. Bogle testified before the U.S. House labor committee yesterday."
That's after the value of worker-run personal investment plans - Individual Retirement Accounts and 401(k)-style programs - fell 27 percent, or $2.5 trillion, in less than two years, retired Vanguard Group founder John C. Bogle testified before the U.S. House labor committee yesterday."
Thursday, February 19, 2009
Can the Obama plan revive the U.S. economy?
Can the Obama plan revive the U.S. economy?: "Is President Barack Obama’s American Recovery and Reinvestment Plan addressing auxiliary problems, significant as they may be, rather than the problem, which is long term recovery of United States industry? A lack of publicized analysis, which inexorably leads to guides of what to do and how to do it, raises doubts and questions. Since President Barack Obama emphasized he is receptive to recommendations to his plan, well, here they are.
Stimulating the economy by government intervention and deficit spending is not a unique change in policy; since the Reagan era, the U.S. economy has depended upon public and private debt for growth and salvation. Government deficits (debt increase of $1 trillion to $9 trillion in 28 years) have financed a great portion of the U.S. economy and credit outstanding ($5 trillion to $50 trillion in 28 years) has financed purchases of industrial products, imported merchandise and a service industry. In 2008, after exhausting credit to all potential debtors who might add purchasing power to an economy in which a significant number of jobs and workers’ wages had been transferred to overseas laborers, the economy hit a barrier - enter the government, too late."
Stimulating the economy by government intervention and deficit spending is not a unique change in policy; since the Reagan era, the U.S. economy has depended upon public and private debt for growth and salvation. Government deficits (debt increase of $1 trillion to $9 trillion in 28 years) have financed a great portion of the U.S. economy and credit outstanding ($5 trillion to $50 trillion in 28 years) has financed purchases of industrial products, imported merchandise and a service industry. In 2008, after exhausting credit to all potential debtors who might add purchasing power to an economy in which a significant number of jobs and workers’ wages had been transferred to overseas laborers, the economy hit a barrier - enter the government, too late."
House Democrats Contemplate Abolishing 401(k) Tax Breaks « One Man’s Thoughts
House Democrats Contemplate Abolishing 401(k) Tax Breaks « One Man’s Thoughts: "Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute."
House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute."
Thursday, February 5, 2009
Newsmax.com - Iran's Supreme Leader Personally Ordered Death Squads
Newsmax.com - Iran's Supreme Leader Personally Ordered Death Squads: "An explosive Iranian government dossier reveals that Iran’s most senior official, Supreme Leader Ayatollah Khamenei, personally ordered the murders of hundreds of opposition activists and intellectuals. In addition, then-President Mohammad Khatami, whom the West considered a moderate, helped cover up the regime’s deadly deeds, according to the documents, which were leaked to a domestic opposition group.
The revelations come as the Obama administration has repeated its calls for “negotiations without preconditions” with the Islamic Republic of Iran leadership, and amid reports that former Defense Secretary William Perry has been discussing security-related issues with senior Iranian officials on Obama’s behalf.
They also come after Khatami stated that he is contemplating another run for president this spring against Mahmoud Ahmadinejad. Khatami was president for two terms, from 1997-2005. He was elected as a reformer but after a brief period of press freedom, his government shuttered newspapers and spearheaded a crackdown on dissent, including the violent quashing of the student rebellion in July 1999.
Since the revelations of his complicity in the coverup of the killings surfaced in the Persian-language media, Khatami has indicated that he might not become a candidate this year."
The revelations come as the Obama administration has repeated its calls for “negotiations without preconditions” with the Islamic Republic of Iran leadership, and amid reports that former Defense Secretary William Perry has been discussing security-related issues with senior Iranian officials on Obama’s behalf.
They also come after Khatami stated that he is contemplating another run for president this spring against Mahmoud Ahmadinejad. Khatami was president for two terms, from 1997-2005. He was elected as a reformer but after a brief period of press freedom, his government shuttered newspapers and spearheaded a crackdown on dissent, including the violent quashing of the student rebellion in July 1999.
Since the revelations of his complicity in the coverup of the killings surfaced in the Persian-language media, Khatami has indicated that he might not become a candidate this year."
IRS Set To Probe 401(k) Tax Compliance : Defined Contribution & Savings Plan Alert
IRS Set To Probe 401(k) Tax Compliance : Defined Contribution & Savings Plan Alert: "The Internal Revenue Service will begin questioning plan sponsors next year about their tax compliance, including gathering information about their deferral rates, eligibility standards and their requirements to meet non-discrimination tests. The agency plans to do so via a questionnaire.
This is a first for the agency, which has until now obtained tax information on 401(k) plans through routine audits and its compliance program, the Employee Plans Compliance Resolution System, both voluntary.
The questionnaire will provide 'a snapshot of the overall health of a 401(k) plan,' Monika Templeman, the agency's director of employee plan examinations, told DCSPA. She declined ..."
This is a first for the agency, which has until now obtained tax information on 401(k) plans through routine audits and its compliance program, the Employee Plans Compliance Resolution System, both voluntary.
The questionnaire will provide 'a snapshot of the overall health of a 401(k) plan,' Monika Templeman, the agency's director of employee plan examinations, told DCSPA. She declined ..."
Monday, January 26, 2009
Congress Eyes 401(k) Changes
With the stock market nose-dive shrinking Americans' 401(k) retirement accounts, Congress plans to evaluate what changes can be made to the system, according to a report from Reuters.
Rep. George Miller, chairman of the Committee on Education and Labor, told Reuters that planned hearings will likely lead to, at minimum, a revival of reforms that were initially proposed last spring before the global financial crisis took hold. These changes include providing workers with more independent advice on how to invest the assets in their accounts, and make 401(k) fees more transparent.
Quoting a study from the non-profit, non-partisan Employee Benefit Research Institute in Washington, Reuters noted that balances in U.S. 401(k) accounts are down $573 billion since one year ago.
"The drumbeat for (the changes) is now growing, because not only did the price of stock go down, but in many cases people found out this (system) has been manipulated one way or another," Miller told Reuters.
Miller added that he was unsure whether it had been a mistake to let employers gradually shift to the 401(k) system in recent decades that has left an increasing number of workers without the fixed benefit for life that pensions pay.
Rep. George Miller, chairman of the Committee on Education and Labor, told Reuters that planned hearings will likely lead to, at minimum, a revival of reforms that were initially proposed last spring before the global financial crisis took hold. These changes include providing workers with more independent advice on how to invest the assets in their accounts, and make 401(k) fees more transparent.
Quoting a study from the non-profit, non-partisan Employee Benefit Research Institute in Washington, Reuters noted that balances in U.S. 401(k) accounts are down $573 billion since one year ago.
"The drumbeat for (the changes) is now growing, because not only did the price of stock go down, but in many cases people found out this (system) has been manipulated one way or another," Miller told Reuters.
Miller added that he was unsure whether it had been a mistake to let employers gradually shift to the 401(k) system in recent decades that has left an increasing number of workers without the fixed benefit for life that pensions pay.
Tuesday, January 20, 2009
Do 401(k) plans still make sense?
Congress has begun looking at ways to overhaul the 401(k) system. At hearings in October, the House Education and Labor Committee heard from a variety of witnesses. Some proposed setting up "universal" retirement accounts, which would cover all workers.
One such plan called for establishing accounts that would receive annual contributions from the federal government and would offer a guaranteed, but relatively low, rate of return.
Another proposed automatically investing contributions in an index fund that holds stocks and bonds, with the mix getting more conservative as workers approach retirement.
Other witnesses proposed less drastic changes, such as providing better education.
One such plan called for establishing accounts that would receive annual contributions from the federal government and would offer a guaranteed, but relatively low, rate of return.
Another proposed automatically investing contributions in an index fund that holds stocks and bonds, with the mix getting more conservative as workers approach retirement.
Other witnesses proposed less drastic changes, such as providing better education.
Tuesday, January 13, 2009
Voros: 401(k) change may create new lost generation
LOST in the news reports of job losses, foreclosures, government bailouts, bank failures and Wall Street bankruptcies is a growing trend among companies that could have more long-term damage than any of the country's recent financial problems.
In fact, it may be 10 or 20 years before we can truly assess the consequences of cash-strapped employers dropping their 401(k) matching contributions to employees.
While the move is cast as a temporary interruption of a key employee benefit that will be reconsidered annually, do not expect this spigot to be turned on anytime soon.
For many employees in a company-sponsored 401(k) plan designed to provide for retirement, a typical matching contribution is 50 cents per $1, up to 6 percent of the employee's contribution.
This built-in hedge is touted to employees as "free money'' and a key reason to join a company's 401(k) plan. The loss of that matching contribution could have unintended consequences. Seeing their own company retreat from the 401(k) model could motivate employees, especially younger ones, to do the same, especially in this bear market.
Compounding the problem, workers will save less, whether they stick to the plan or not, because the loss of the matching funds will mean they will have less money to buy stocks, which will be at historic discounts this year.
In fact, it may be 10 or 20 years before we can truly assess the consequences of cash-strapped employers dropping their 401(k) matching contributions to employees.
While the move is cast as a temporary interruption of a key employee benefit that will be reconsidered annually, do not expect this spigot to be turned on anytime soon.
For many employees in a company-sponsored 401(k) plan designed to provide for retirement, a typical matching contribution is 50 cents per $1, up to 6 percent of the employee's contribution.
This built-in hedge is touted to employees as "free money'' and a key reason to join a company's 401(k) plan. The loss of that matching contribution could have unintended consequences. Seeing their own company retreat from the 401(k) model could motivate employees, especially younger ones, to do the same, especially in this bear market.
Compounding the problem, workers will save less, whether they stick to the plan or not, because the loss of the matching funds will mean they will have less money to buy stocks, which will be at historic discounts this year.
Monday, January 12, 2009
The 401K Experiment Failed
The chatter for government take over of private 401(k)'s is getting louder...
So, how has the 1981 401K experiment worked out? It's 2009, and no one can afford to retire. Wealth is massively concentrated at the top. So maybe it didn't work out so well - for us. Pretty well for those at the top, though.
But I'm not advocating a return to corporate-funded pensions for their workers. I think we should tax corporate profits and put money into greatly expanding Social Security so everyone - not just people who work for corporations - can afford to live well when they are old. That would be the solution a democracy would choose.
(PS another problem with 401Ks and the "individual" approach is that you don't know how long you are going to live, so you don't know how much to take out each month. When "pooled" as with a pension plan or Social Security actuaries can determine how much on average to pay out. The only plan that can work mathematically is a socialized plan.)
So, how has the 1981 401K experiment worked out? It's 2009, and no one can afford to retire. Wealth is massively concentrated at the top. So maybe it didn't work out so well - for us. Pretty well for those at the top, though.
But I'm not advocating a return to corporate-funded pensions for their workers. I think we should tax corporate profits and put money into greatly expanding Social Security so everyone - not just people who work for corporations - can afford to live well when they are old. That would be the solution a democracy would choose.
(PS another problem with 401Ks and the "individual" approach is that you don't know how long you are going to live, so you don't know how much to take out each month. When "pooled" as with a pension plan or Social Security actuaries can determine how much on average to pay out. The only plan that can work mathematically is a socialized plan.)
Tuesday, January 6, 2009
Massachusetts increases taxes for small businesses
The cornerstone of most individual’s financial plan and accumulated wealth resides in their 401(k) accounts. However, the Massachusetts taxing authorities have singled out owners of small unincorporated businesses and are taxing their retirement contributions using rules that differ from everyone else.
During 2008, the Massachusetts Department of Revenue (DOR) issued a directive which disallows partners and other self employed individuals a deduction for contributions made to their 401(k) plans. This directive is a clarification of an existing Massachusetts law that had not been enforced by the DOR for years. This directive does not apply to the employees of said businesses, just the owners. This will effectively increase the taxes of an individual contributing $15,500 to their 401(k) plan by $820.
It is difficult to understand why the Massachusetts legislators have discriminated against unincorporated business owners and decided to tax their retirement accounts? Why not also tax the owners of incorporated businesses? Why not the employees? Why not tax the retirement plans of Massachusetts legislators? Effective law making would provide some level of equality in this matter and would encourage people to save for retirement, not discourage them.
Small business owners and those looking to start business need to be aware that they will see a significant increase in their Massachusetts tax burden in 2008 and in the future.
During 2008, the Massachusetts Department of Revenue (DOR) issued a directive which disallows partners and other self employed individuals a deduction for contributions made to their 401(k) plans. This directive is a clarification of an existing Massachusetts law that had not been enforced by the DOR for years. This directive does not apply to the employees of said businesses, just the owners. This will effectively increase the taxes of an individual contributing $15,500 to their 401(k) plan by $820.
It is difficult to understand why the Massachusetts legislators have discriminated against unincorporated business owners and decided to tax their retirement accounts? Why not also tax the owners of incorporated businesses? Why not the employees? Why not tax the retirement plans of Massachusetts legislators? Effective law making would provide some level of equality in this matter and would encourage people to save for retirement, not discourage them.
Small business owners and those looking to start business need to be aware that they will see a significant increase in their Massachusetts tax burden in 2008 and in the future.
Monday, January 5, 2009
Economist proposes guaranteed retirement funds for everybody
Here we go. News starting to leak out again.
"I want what members of Congress have -- for everybody else," says Teresa Ghilarducci as she describes her plan for Guaranteed Retirement Accounts.
Ghilarducci, the director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research, sees her plan as a better way for Americans to save for retirement.
Her proposal would be a mandated savings program, where workers would receive a safe, steady retirement income.
She says the U.S. expects something the rest of the world doesn't.
"We expect people to save every paycheck from the very beginning of their worklife at least 5- to 10 percent, keep that money in an account their entire worklife, not withdraw it for their child's expenses, for other kinds of hardships. We require that people know how to invest it, and we require that people find the lowest fees with which to invest."
Ghilarducci says that's something hard, if not impossible, for people to do when employers control 401(k) plans.
She says the government is the only entity on the planet with a long enough perspective to guarantee a return.
"I want what members of Congress have -- for everybody else," says Teresa Ghilarducci as she describes her plan for Guaranteed Retirement Accounts.
Ghilarducci, the director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research, sees her plan as a better way for Americans to save for retirement.
Her proposal would be a mandated savings program, where workers would receive a safe, steady retirement income.
She says the U.S. expects something the rest of the world doesn't.
"We expect people to save every paycheck from the very beginning of their worklife at least 5- to 10 percent, keep that money in an account their entire worklife, not withdraw it for their child's expenses, for other kinds of hardships. We require that people know how to invest it, and we require that people find the lowest fees with which to invest."
Ghilarducci says that's something hard, if not impossible, for people to do when employers control 401(k) plans.
She says the government is the only entity on the planet with a long enough perspective to guarantee a return.
Friday, January 2, 2009
The End of the 401(k) as We Know It?
For years, we have heard: save for retirement because Social Security might not be available when you need it, and even if it is, it won't be enough. So we socked away what we could all these years, and saw 20-40 percent or more of its value disappear in 2008.
Now, businesses are saying they can't afford to match contributions as they once did, and The New York Times said that the trend will have long-lasting effects:
Now, businesses are saying they can't afford to match contributions as they once did, and The New York Times said that the trend will have long-lasting effects:
Subscribe to:
Posts (Atom)
