Did you know that over 50% of Americans have a 401(k) plan? For many of us it is our primary funding source of retirement savings. For some, it may be the only source of savings. http://www.gallup.com/poll/16564/Many-Consumers-Lack-Rainy-Day-Fund.aspx
401(k) Plans can be great for helping to fund your retirement - - IF you are saving enough and don't fall into some common traps. I love 401(k)s and have a passion for helping companies and indviduals get more from their plans. With that in mind, I am going to address 5 major issues with 401(k) plans in my next several posts.
Around 1985, 401(k) plans passed pensions as the Primary Retirement Vehicle, as the New York Times states in a recent article.
Pensions had been dying for a long time, mostly due to cost. 401(k)s require employees to contribute to their own retirement savings. Many companies provide a matching contribution of some sort, although in recent times, those have also been cut back.
How did 401(k)s come into being?
In 1978, the Tax Reform Act passed (Provision Internal Revenue Code Section 401(k)), which allowed employees to receive a portion of their income as tax deferred compensation. Ted Benna
http://pipl.com/directory/people/Ted/Benna then created the first 401(k) in 1979. Also in that year, Johnson & Johnson, Honeywell, and Pepsico established 401(k) plans for their employees.
In my next post, we will look at the first serious issue which needs to be addressed in 401(k)s -
For more information, please contact me at http://www.helpmy401k.us/.