401 K Plans

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.

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?

Federal officials proposed rules Thursday to ensure better disclosure of the fees levied to administer 401(k) retirement accounts, but critics immediately blasted the measures as inadequate. The Department of Labor said its proposal was designed to address concerns that retirement nest eggs are being eroded by obscure fees and deductions that employees may not even know they are paying.

Younger workers can count on 401(k) plans to replace just a modest percentage of their income when they retire in the middle of this century, according to a new study that highlights the need for changes in the nation's pension system, members of Congress said Tuesday. Overall, just 36% of workers had savings in 401(k) or similar retirement plans in 2004, with participation practically disappearing among the lowest-paid workers, the Government Accountability Office reported.

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.

James LaRue says he lost $150,000 when his instructions to his employer for where to invest money in his retirement plan were ignored. Now the Supreme Court will decide whether a federal pension-protection law gives LaRue the right to sue to recover his losses. Arguments in the case, which is likely to have far-reaching consequences, were scheduled for today. LaRue, who used to work at a management consulting firm, is among the 42 million workers who contributed to a 401(k) retirement plan.

The Labor Department said Tuesday that it wouldn't endorse the use of so-called stable-value funds as a default investment for 401(k) participants who don't decide how to allocate their retirement-plan portfolios. The decision is a blow to the insurance industry, which markets stable-value funds. The new rules, which go into effect at the end of December, were adopted under a 2006 pension law that Congress passed to help Americans build up retirement funds.

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.

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.

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.