401 K Plans

Like many Americans, Steve Kriegsfeld has been watching his life savings bounce up and down each time the stock market takes a dramatic turn. Lately, it's the drops that have grabbed his attention. In just one day last week, the Dow Jones industrial average plunged 465 points before partially recovering. It is down nearly 6% since Jan. 1. "Does it concern me when it goes down?

Experts warn that taking money out of your 401(k) account while you're still working can cost you dearly later on. Nancy and Charles Powell ignored that advice and borrowed money from his 401(k) plan. Years later, they're retired and have no regrets. "We listened to a lot of people saying, 'Don't touch that,' " said Nancy Powell, 60, who lives in Bellingham, Wash. "But we borrowed out of it and we're retired and just fine."

For nearly three decades, working Americans have been part of a huge experiment with their future well-being: Old-fashioned pensions that guaranteed specific retirement benefits have given way to old-age benefits that depend on personal investing in the financial markets.

Congress and government regulators are planning an array of moves to strengthen oversight of 401(k) accounts, which have become the linchpin of retirement savings for millions of Americans but are often burdened by hidden fees that chip away at their value. Rep.

Goodyear Tire & Rubber Co. said it would scrap its pension program for current workers and raise retiree healthcare payments to save as much as $90 million annually. In 2009, Goodyear will replace defined-benefit pension plans with 401(k) programs with matching contributions. Corporate salaried and retail store retirees will pay more for health benefits beginning next year, and some insurance benefits will be canceled, Akron, Ohio-based Goodyear said.

A political push for greater disclosure of fees in 401(k) retirement savings plans gathered steam Tuesday, as an influential Democratic lawmaker said he planned to shine light on whether an array of service firms were "dipping into other people's money" without good cause. "We have to ask whether all these fees are necessary, and we have to examine whether they are undermining workers' retirement security," said Rep.

If you're lucky enough to have the newest kind of 401(k) plan, experts say you're off to a good start even if you don't lift a finger. The hot trend in retirement savings plans is making the 401(k) run on autopilot. Employees are enrolled automatically. The plan decides how much you should contribute and simply takes the money out of your paycheck. How your money is invested is also decided for you. And your contribution amounts and investment allocation automatically change over time.

Consumer advocates say better disclosure of fees for 401(k) plans would lead to bigger retirement nest eggs for millions of Americans. But business groups Thursday made clear they would fight legislation that would mandate a comprehensive listing of all such expenses. Too much disclosure, they argued, would overwhelm employees with unnecessary detail, raise expenses for plan administrators and ultimately fail to benefit retirees.

For investors who own stock mutual funds in 401(k) retirement plans or similar programs, this is a good time for a thorough review of your holdings -- and of the other investment options available in the plan. Some issues to consider: * How is your savings allocated among large-capitalization, mid-cap and small-cap funds? If you aren't sure what kind of stocks your funds own, that information should be readily available from the plan or from the individual fund companies' websites.