401 K Plans

Figuring out what you're paying for your 401(k) isn't easy. Here are some pointers. Mutual funds, in which most 401(k) money is invested, collect a percentage of your account balance for management fees and operating costs. This charge, called the expense ratio, can be found in fund prospectuses and on many fund-company websites. In contrast, fees related to the administration of your 401(k) -- for record keeping, employee education and other services -- are harder to find.

Until recently, it wasn't easy for workers to get specific advice about managing their 401(k) investments. Most employers shy away from the liability issues involved in giving specific mutual fund recommendations and instead stick to general, one-size-fits-all information about retirement planning. Thanks to the Internet, however, workers can now get personalized investment advice free or at low cost.

Persistence pays. The average nest egg for people who have been in 401(k) plans for at least six years topped $100,000 for the first time, according to a survey released Thursday. Their account balances averaged $102,014, up 9.6% from $93,085 in last year's survey. "The discipline of saving pays off," said Sarah Holden, senior economist with the Investment Company Institute, a mutual fund trade group that sponsored the study with the Employee Benefits Research Institute.

The House on Wednesday overwhelmingly approved legislation that would sharply increase the limits on contributions to individual retirement accounts and other tax-favored pension programs. The bill, approved 407-24, would gradually raise the limit on IRA contributions to $5,000 from $2,000 a year and increase the cap on annual contributions to 401(k) plans from $10,500 to $15,000.

Boeing Co. proposed putting newly hired machinists in a 401(k)-style retirement plan to ease a pension liability it estimates at $46 billion. The company's machinists union has said it opposes the proposal, among the most significant concessions Boeing sought as it opened formal talks on a new three-year labor contract. The 26,000 machinists now get a defined-benefit pension that guarantees a portion of their income in retirement. Chicago-based Boeing also wants to restructure machinists' top wage rates, which it says exceed market averages, and reduce healthcare costs.

Although U.S. workers can invest money in a retirement fund sponsored by their employer, it is not clear whether they can sue to recover money lost because of mistakes by the fund's administrator. That issue came before the Supreme Court on Monday in a case that could shape the pension rights of 70 million employees.

General Motors Corp. said Tuesday that it would freeze or eliminate traditional pension benefits for salaried workers in the U.S. and move newer hires into a plan that relied more on 401(k) investments as the automaker continued to cut costs. The changes start next year and affect about 42,000 workers, including top executives, accountants, plant managers, designers and engineers. The automaker, which lost $8.

Bank of America Corp. said Thursday that it violated U.S. tax law in 1998 and 1999 in letting employees transfer money to its pension plan from its 401(k) retirement plan. The Internal Revenue Service issued a December 2005 memorandum indicating that amendments the company made in 1998 to its 401(k) plan to permit the voluntary transfers violated an "anti-cutback" rule in the Internal Revenue Code, the bank said. A spokeswoman said the bank was trying to work out a resolution with the IRS.

A little-noticed provision in a pension law signed Thursday by President Bush will for the first time allow anyone to inherit a 401(k) nest egg without immediately paying taxes on the windfall, a benefit that in the past was reserved for spouses. Gay advocates and other observers described the measure as a significant shift in how the government treats domestic partners who are not married, even though the provision was not written specifically for same-sex couples.