401(k) Doomed from the Start

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Yahoo.com just posted this great article regarding 401(k) and the mistakes people make with it. Here is some information they posted. “The purpose of a 401(k) is to provide meaningful retirement income to plan participanta during his or her retirement. Most plans fail to meet this objective due to mistakes by the participants and plan sponsors. This applies to both large and small companies.”

Here are some mistakes participants make with their 401(k):

  • Not participating in the plan at all.
  • Failing to contribute adequate percentages to get the company match.
  • Not understanding how much needs to be contributed to have the desired retirement income.
  • Not understanding the level of risk in the investments selected.
  • Taking too much risk or too little risk with the investments.
  • Not understanding the costs of the 401(k).
  • Putting too much into company stock.
  • Borrowing from the 401(k).
  • Cashing out the plan when changing jobs.
The mistakes of plan participants and plan sponsors prevent most 401(k) plans from providing meaningful retirement income. The “401(k) industry” has made a killing off the current system, which has made the problem worse. The Department of Labor has provided written guidance as to what to do to address these issues, but too few plan sponsors are aware of this guidance or have embraced it. Many have recommended extensive use of independent plan fiduciaries. Doing so would prevent many of the mistakes of both plan sponsors and participants. While more companies are embracing this movement, the changes are too slow to help many participants achieve meaningful retirement income. To view the full article visit yahoo.com and for a free insurance quote check out our website http://www.kimberleyvassal.com

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