Company 401k Plans

Top 650. Dec 12, 2005 5:36 PM

» AL_W - Re: Re: Vanguard vs. Valic

In response to Re: Vanguard vs. Valic posted by rasputin:

Great work Ras.

-- posted by AL_W

Top 651. Jan 8, 2006 5:45 PM

» dixie41 - Company moves 401(k) plan

Hi I am new at this so please bare with me.My husband and I work at the same company.We have both been their for a long time.Between the two of us we have a big chunk in our 401(k).In november of 2005 they changed to fidelity.We were told it would take (26) months for all our money to go into the new plan.Does that sound right to any one?That sure seems like a long time.They said it would take that long for the annuity to mature.I am sure it is ok,but it is a lot of money to lose too.I have asked a lot of questions at the company ,but they are getting a little tired of my asking so many questions.please help. Terrie

-- posted by dixie41

Top 652. Jan 8, 2006 7:36 PM

» AL_W - Re: Company moves 401(k) plan

In response to Company moves 401(k) plan posted by dixie41:

Dixie,

26 months seems awfully long, IMO, but I don't know how an annuity maturation effects the process. However, if it's just waiting a regular annuity maturation point, there should be no loss to you. In fact, they may be saving you an early withdrawal penalty.

Will they move your stocks and funds in a more timely basis? Is it only the annuity that is delayed?

About 10 years ago, my company moved our 401K's to Fidelity. My recollection is that we had no access for about 6 weeks. Only stock ( the company's ) and Funds were involved. No annuities.

I have to ask why you would put 401K funds into an annuity. They generally are expensive and very restrictive. Most are issued by Insurance Companies with a big fee to the seller of the annuity. Of course, that fee comes out of ( somewhere - most likely hidden ) your potential return.

-- posted by AL_W

Top 653. Jan 9, 2006 2:55 PM

» dixie41 - Re: Re: Company moves 401(k) plan

In response to Re: Company moves 401(k) plan posted by AL_W:
AL ,Thank you for your response. To tell you the truth i know nothing about this stuff. What if i told you what we had our money in at the old 401(k) plan? Could you maybe make me understand from that?

-- posted by dixie41

Top 654. Jan 9, 2006 4:03 PM

» dixie41 - Re: Re: Re: Re: Company moves 401(k) plan

In response to Re: Re: Re: Company moves 401(k) plan posted by Kirk:
Thanks Kirk, I will start with my husbands old plan 87% conservative(reliastar fixed intrest 4%balanced (fidelity puritan fund) 3%growth&income(stocks)fidelity growth&income fund 3%growth(amcentury ultra fund 3% international(ing oppenheimer global port)mine much the same other than i have 4% aggressive growth(ing salomon brothers ag gro pt) Man am I glad thats done.lol hope this helps. thanks

-- posted by dixie41

Top 655. Jan 22, 2006 11:10 AM

» AL_W - "The burden has shifted"

Found in Sunday's SJ Mercury News: http://www.miami.com/mld/miamiherald/bus...

Posted on Sun, Jan. 22, 2006

The burden has shifted

EMPLOYERS DROP GUARANTEED PENSION PLANS FOR 401(K)S, LEAVING WORKERS RESPONSIBLE FOR THEIR OWN RETIREMENT

By Laura Smitherman and Meredith CohnBaltimore Sun

As companies continue to drop pensions that have afforded generations of workers a comfortable retirement, a chorus of financial experts warns that workers must learn to save for themselves.

But like admonitions to exercise more and eat less, many workers aren't heeding the advice. One recent survey revealed that one-fifth of Americans think their best shot at amassing savings of several hundred thousand dollars is to win the lottery. And that's far short of the $1 million that some financial planners say baby boomers will need for a nest egg.

T. Rowe Price crunched the numbers with a computer simulation that's able to account for thousands of possible market scenarios. The conclusion: Individuals should save at least 15 percent of pretax salary in order for those investments to bring half of that salary in retirement.

The announcement earlier this month that IBM plans to freeze pension benefits and put workers into a 401(k) plan was seen by many retirement experts as pivotal in the shift away from corporate pensions. Those benefit plans first became popular after gaining tax exemptions in the early part of the 20th century and defined retirement security for the postwar generations.

Over the last quarter-century, the percentage of private-sector workers who rely on defined-benefit plans or pensions has shrunk to 6 percent, while the percentage of workers in defined-contribution plans such as the 401(k) more than quadrupled to nearly 30 percent.

The shift puts more responsibility on workers' shoulders, exacerbating concerns that Americans in general don't save enough and aren't savvy enough to navigate the financial markets on their own. And companies, some of which shed pension plans because they could no longer afford them, have come under pressure to ensure that employees become better stewards of their own retirement.

But even corporate executives aren't so sure their efforts are paying off. A survey of more than 220 U.S. companies released earlier this month by Hewitt Associates, the human resources company based in Lincolnshire, Ill., found that only 6 percent of companies are confident their employees will take responsibility for their retirement future, down from 12 percent a year earlier.

Many companies have responded by making their 401(k) plans practically automated. Namely, they are adding features to thwart bad financial moves, including automatically enrolling employees to get them started saving as early as possible, automatically increasing their contribution amounts, and automatically rebalancing the accounts toward the less volatile bond market as employees grow older.

Experts say IBM may be a bellwether for other companies to design retirement plans that lead to fatter savings. Among the features built into IBM's new plan is automatic enrollment, whereby at least 1 percent of each paycheck is directed into an account. The plan also offers an annuity option, which would help retirees manage their retirement by providing an investment vehicle that pays out until death.

``I am an extraordinary fan of defined-benefit plans, but the world has in fact dramatically changed,'' said Dallas Salisbury of the Employee Benefit Research Institute. ``If the offset is that companies start aggressively encouraging people to save and provide financial literacy education, that may be a very positive silver lining.''

Many IBM workers will be better off under the relatively generous 401(k) that includes a dollar-for-dollar company match of up to 6 percent of pay that's diverted into the plan, Salisbury said. He added, however, that older workers might have a difficult time making up lost pension benefits with the new plan.

[EC] My company, Owens Corning, shifted to a 'cash balance' plan 6 years ago, to which they contributed 4% a year with a catch-up feature for older employees. Each person's fund collects market rate interest.

Addtionally, we have a 401K with one-for-one cash matching up to 5%.

The old 'defined benefit' was not cancelled for current employees, but frozen at the 2000 wage level. We get to choose which plan has more value. My analysis says the two values cross about age 64. The old plan's lump sum value jumped 100% when I turned 55 last year. [end of EC]

Workers who already accrued benefits under the IBM pension won't lose them, but they will no longer accrue benefits after next year. IBM had already closed its pension plan to new employees at the end of 2004.

While IBM is considered healthy, many companies that have dumped retiree benefits were in financial straits. United Airlines parent UAL, which is in bankruptcy, is one of several airlines that have dropped pension plans, and Bethlehem Steel ended retiree health benefits before it was sold. Other companies that have closed or frozen pensions are Lockheed Martin, Verizon Communications, Hewlett-Packard and Motorola.

Meanwhile, many experts warn that a pension crisis is looming because companies haven't set aside enough money to cover future payments to retirees. According to the Pension Benefit Guaranty Corp., the federal agency that insures pension benefits, pensions are under-funded by about $450 billion.

The prospect that a pension plan -- or a company -- could become insolvent makes 401(k) plans more attractive, said Conrad Ciccotello, director of graduate financial planning programs at the Georgia State University's Robinson College of Business.

The problem with the 401(k) is that people don't contribute enough. According to Federal Reserve data, U.S. households led by people between the ages of 55 and 64 have a median of $55,000 in retirement accounts, including 401(k)s. For those who are 65 and older, about 20 percent of them count Social Security as their only income, according to the Social Security Administration.

-- posted by AL_W

Top 656. Jan 26, 2006 8:16 AM

» gimpy13323 - 403B rollover

My wife are both retired teachers with a fairly substantial fixed retirement income. since we are both under 60, we are not receiving SS checks. Much of our investments are in our 403B accounts which is quite substantial. We will probably only use this money for trips, cars, grandchildren's education and so on. I am interested in preserving the money. I am told that rolling over to a traditional IRA is in our best interest and also for our children's interest. I have been looking at Vanguard and T. Rowe Price for the rollover. My question for someone is one regarding tax consequesces if we were to leave the money in the 403B's. Are tax consequences greater in 403b's then in IRA's? Any imput and suggestions would be greatly appreciated. I have two books by Ed Schott which I am told will help me greatly but I need help in making a sound decision. Tx.

-- posted by gimpy13323

Top 657. Jan 26, 2006 8:27 AM

» allancoleman - Re: 403B rollover

In response to 403B rollover posted by gimpy13323:

hello gimpy13323 ,

the tax consequesces are pretty much the same with distribuions from either your traditional IRA or your 403(b) : everything coming out of a deferred account such as a IRA or 403(b) is considered ordinary income and will be taxed at that year's tax backet .

suggest you buy the 7th edition ( january - 2006 ) of Nolo Press's book , " IRAs , 401(k)s , & Other Retirement Plans - Taking Your Money Out " , available at ( http://www.nolopress.com ) . i received my copy just this week and it's excellent , as usual . it's probably the only other source i'd be comfortable with figuring out the IRS consequesces of your decison . also IRS publication 590 is the ONLY source the IRS will use for all their rulings on your decision .

good luck in your sound decision .

-- posted by allancoleman

Top 658. Jul 3, 2006 9:33 AM

» a026794 - Bundled vs. Unbundled 401(k) plans

In response to Bundled vs. Unbundled 401(k) plans posted by mnovak13:

-- posted by a026794