401k Plans

Is your 401(k) plan any good? Given the significant role of 401(k)s in retirement planning, it's important to know how your company's plan stacks up. BrightScope Inc., a 401(k) rating firm in San Diego, issued a list of the 25 best plans in the Los Angeles area. Rankings are based on factors such as fees, company matching contributions, vesting schedules and quality of investment options. Biotech giant Amgen Inc. claimed the top spot. BrightScope's database covers 1,712 plans of companies within 50 miles of Los Angeles.

As traditional private industry pension plans slowly fade away, self-directed employee retirement plans are burgeoning. As of last year, more than 268,000 such plans, known as 401(k), were in effect. Their nearly 20 million participants held assets worth $640 billion. Each month about $3 billion in fresh money flows into retirement accounts, much of it earmarked for investment in mutual funds. What the U.S.

If you want a better 401(k) plan, be prepared to take it to the top. Say you want to add investment options to the plan, or dump poor-performing mutual funds. The first step is to find out who at your company has primary responsibility for the program. "At small companies the person with the most money in the plan is the CEO," said David Wray, president of the Plan Sponsor Council of America. That means the chief executive is most likely to be the person you'll need to persuade.

If ever there were a teaching moment about the perils of financial ignorance, it's the current economic crisis. Millions of Americans are learning the hard way about the pitfalls of teaser mortgage interest rates and runaway credit card debt. Sadly, their children may be doomed to repeat the mistakes of their overdrawn elders. Financial teaching at home and in the nation's schools is skeletal at best, educators say.

The House Ways and Means Committee, under attack by President Reagan for the first time for making changes in his tax overhaul proposal, agreed Wednesday to place new restrictions on special retirement savings programs known as 401(k) plans. The committee moved to limit to $7,000 the maximum annual contributions to the 401(k) plans, under which about 12 million employees currently defer taxes on a percentage of their incomes until retirement.

Q: I am so frustrated! I left my job in October, 1989, and still have not received my 401(k) account funds. I submitted my withdrawal request in April, 1990, and now, a year later, I still haven't seen a penny. Is there anything I can do? Is this experience a common one? --L. C. A: Your experience is not uncommon--nor is it necessarily the result of a tight-fisted employer refusing to pay out what's owed you.

NO ONE seems to care about the upcoming attack on the World Trade Center site. Why? Because it won't involve villains with box cutters. Instead, it will involve melting ice sheets that swell the oceans and turn that particular block of lower Manhattan into an aquarium. The odds of this happening in the next few decades are better than the odds that a disgruntled Saudi will sneak onto an airplane and detonate a shoe bomb.

Exchange-traded funds have taken Wall Street by storm in the last few years. But the boom in ETFs may leave some investors confused about how to make the best use of the portfolios, which come in a dizzying array of flavors. Here's a practical tipsheet on investing in ETFs versus their main rivals, traditional mutual funds: Going with ETFs is going with the market flow. The vast majority of ETFs were created to track sectors of financial markets. So using them means you are betting on specific parts of the market, and expect to earn whatever average returns those sectors generate - or suffer whatever losses they incur.

The Internet is making it easier than ever to offer your workers a 401(k) plan, perhaps the most popular employee benefit ever invented. The Profit Sharing/401(k) Council of America estimates that 340,000 U.S. companies offered 401(k) plans last year, up from 175,000 five years earlier. The plans covered some 41 million workers, up from fewer than 28 million in 1994, and the assets in their accounts totaled $1.7 trillion, according to the PSCA.

A lot of you are cheating yourselves out of a decent retirement. If your company has a salary set-aside plan for pensions, popularly called a 401(k), you are probably picking investments that won't do a good job in building financial security. The best bet for the long haul is the stock market, where mutual funds beat bonds, Treasury bills and bank certificates of deposit. But most of you don't have the stomach for the ups and downs of the market, the soaring and crashing of the Dow Jones.