401k plan

As a spouse has an interest in the accrued benefit of a participant, the plan does not satisfy the survivor annuity requirement unless the plan provides that, at the time the participant's accrued benefit is used as security for a loan, spousal consent to such use is obtained. Consent is required even if the accrued benefit is not the primary security for the loan.

No spousal consent is necessary if, at the time the loan is secured, no consent would be required for a distribution under $5,000. Spousal consent is not required if the total accrued benefit subject to the security is not in excess of the cash-out limit ($5,000) in effect under 1.411(a),11(c)(3)(ii).

A woman who claimed that a plan distribution form indicating her consent to her late husband’s distribution election was never properly notarized and therefore invalid has the agreement of a federal judge

The husband had elected a split distribution: one half in a lump sum and one half in an annuity without survivor benefits. The husband passed away after having received the lump sum distribution and two annuity payments. The wife then sued over the waiver's validity.

Over the past two decades, 401(k) plans have grown to be the most widespread private-sector employer-sponsored retirement plan in the United States, and now serve as the most popular defined contribution (DC) plan, representing the largest number of participants and assets. In 2007, 48.5 million American workers were active 401(k) plan participants. By year-end 2007, 401(k) plan assets had grown to represent 17 percent of all retirement assets, with $3.0 trillion in assets. In an ongoing collaborative effort, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) collect annual data on millions of 401(k) plan participants as a means to accurately portray how these participants manage their accounts. This paper serves as an update of EBRI and ICI's ongoing research into 401(k) plan participants' activity through year-end 2007. The report is divided into four sections: The first describes the EBRI/ICI 401(k) database; the second presents a snapshot of participant account balances at year-end 2007; the third looks at participants' asset allocations, including a new analysis of 401(k) participants' use of lifecycle funds; the fourth focuses on participants' 401(k) loan activity.

Executive Summary

SIGNIFICANCE OF AUTO-ENROLLMENT: Automatic enrollment of participants in 401(k) plans, which was encouraged by provisions in the Pension Protect Act of 2006, is designed to overcome the drawbacks of voluntary enrollment by getting more workers to save in their work place retirement plan. Auto-enrollment for 401(k) plans has been demonstrated by previous EBRI research to have substantial potential benefits for some employees. 

Though the S&P 500 remains 28 percent below its October 2007 peak, employees who have stayed invested in 401(k) plans and continued to contribute have fared better. About 78 percent of them now have more money in those accounts than before the market top three years ago, according to estimates by Jack VanDerhei of the Employee Benefit Research Institute.

• What is the loan’s interest rate?
• Will I be charged points?
• What are the closing costs and all other fees?
• What is the annual percentage rate, or APR – the rate you’ll pay per year for all the costs associated with the loan?
• Is there a pre-payment penalty?
• How is the loan amortized, meaning how quickly is the principal paid off?

• When does the rate adjust?
• How often does the rate adjust?
• Is there a cap limiting the amount by which the rate can adjust? What would my monthly payments be if my interest rate hit that cap?
• What is the index and margin that will determine my rate? How has the index changed over time?

• How does the discount introductory rate compare with rates for 30-year fixed-rate loans?

• How long do I expect to stay in my home?
• Are my job and income secure over the long term?
• Will I be able to afford higher payments in the future?
• How comfortable am I with risk?

This would certainly seem to be the case based upon this excellent and disturbing post by Kathy Kristof-Senate Moves to Keep 401(k) Fees Hidden.

This issue needs be kept on the front burner. I fear that the Senate Finance Committee is hesitating to act on this issue out of fear that contributions from 401(k) providers will dry up. In my opinion this is the height of lawmakers putting interests of the public last.
 I encourage you to email the members of the Senate Finance Committee and ask them what they could possibly still need to "vet." Ask them to reconsider their decision and to pass a measure that mandates uniform, total, and full disclosure of ALL fees and expenses for all 401(k) plans.  No loopholes, no

Caps placed by the plan and/or IRS regulations usually limit the percentage of salary deferral contributions. There are also restrictions on how and when employees can withdraw these assets, and penalties may apply if the amount is withdrawn while an employee is under the retirement age as defined by the plan. Plans that allow participants to direct their own investments provide a core group of investment products from which participants may choose. Otherwise, professionals hired by the employer direct and manage the employees' investments.

A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

Many employers, in an effort to attract and retain talent, offer match a certain percentage of the employee's contribution. According to Starbucks "Total Pay Package" brochure, for example, the company a percentage of the first match 4% of pay the employee contributes to their 401 (k) retirement plan. The employees of the company for less than 36 months will represent 25%, 36 to 60 months duration will be a 50% similarity, 60 to 120 months receive a 75% similarity match, 120 or more months receive a 150%. In other words, an employee working at the coffee giant for over ten years earning $ 100,000 would be $ 4,000 to your 401 contribution (k) a $ 6,000 deposit to the account directly by the company (150% match on $ 4,000 contribution. ) All the employees would be deposited above the 4% threshold is not a game.
Even if you have high interest credit card debt, it is preferable to help fit in almost all cases to the maximum amount your company!The reason is simple mathematics: If you pay 20% on a credit card and your company matching you dollar for dollar (a 100% return), you will end up poorer by paying off the debt. Factor in the deferred tax profits by 401 (k) plan created, and the disparity is even greater. For more information about this topic I recommend the work of Suze Orman.
Although the topic is discussed in more detail later in this article, be aware that employers are matching contributions up to six percent of the employee's salary before tax is not included in the annual limit. For example, if you qualify, you could make a 401k contribution of $ 16,500 in 2009 and still have your employer to deposit with the first six percent of your salary, the game beyond the $ 16,500 you contributed directly would.

Every company, whether a C Corporation may establish, S corporation, partnership, sole proprietorship, self-employed plan. The company sets the conditions within certain guidelines, which will be established at the time the plan. Employers, persons with less than 1 year service, union members, non-US citizens, part-timers to limit, etc., from being eligible for the plan. Contributions to plan can come from voluntary employee salary reduction, employer or both. Each employee can defer in 2010 up to $ 16,500 or 100% of compensation, less. Participants aged 50 years can make additional "catch-up" contributions of $ 5,500 in 2010. Employees are immediately vested 100% with their own salary reduction tax deferred

Employee 401k contribution are automatically deducted from their paycheck each pay period. This money will be before the employees paycheck is taxed over. The contributions are invested at the employees direction in one or more funds in the plan provided. Employers often "match" employee contributions, but are not obliged to. While the investments grow in the employees 401k account, they do not pay taxes on it.

Employer-funded pensions are usually divided into two broad categories: defined benefit (DB) and defined contribution (DC). In a DB plan, the employer promises a defined amount to retirees to pay for meeting certain eligibility criteria. In other words, the plan defines the service received to be. In its typical form, a DB plan pays a lifetime monthly benefit for retirees to meet